More Pain To Follow Yen As It Prepares For the Worst Year Since 1970
This was a rather difficult year for Yen as it lost against the USD and other currencies. However, experts believe that it is only a start, and more pain will follow the Yen for the year ahead as well. The policy gap between a dovish Bank of Japan and a hawkish Fed means that Yen might not be able to recover its losses against the USD!
This divergence in the policy has caused the Yen to lose against a lot of other currencies. Just this year alone, the Yen has almost around a fifth of its actual value. And as a result of this bearish trend, the Japanese currency has made a new 24-year low as well! At the time of writing this, one USD was equal to around 146, which is way higher than what we saw during the Trump era.
As a result of this fast devaluation, the authorities had to pump 2.8 trillion into the markets to stabilize the exchange rate. This marks the first time that the authorities have had to intervene in the markets since 1998!
Despite the intervention, experts believe that the Yen weakness will continue as the BOJ is still not ready to part ways with its dovish policy anytime soon!
All over the world, the interest rates are rising, but Japan is a different story that has decided to continue its relaxed policy.
Yen Is The Worst Performer Among G10 Currencies
Among the G10 currencies, the worst performer is Yen, without any doubt, and was last seen trading at the rate of 144 against the USD. On a yearly basis, the losses of the Yen against the USD exceed 20%, which is the biggest loss since 1970.
And looking ahead, experts believe that the uptrend in USD/JPY is unlikely to reverse anytime soon. Some of the factors which are making the Yen lose against the USD include the balance of payment deficit, policy divergence, and worsening economic conditions in Japan.