Japanese Yen plummets to 34-year low, sparks concerns

Posted on April 1, 2024   |  

The Japanese yen has hit its lowest level against the US dollar in 34 years, prompting serious warnings from Japan's finance minister.

During the Asia session, the yen traded at 151.97 per dollar, indicating a 0.2% decline.

This decline occurs amid economic challenges in Japan, with the yen reaching its weakest point since the mid-1990s when the country faced an asset bubble burst.

The depreciation of the yen results in higher import costs, contributing to inflation, and making exports more competitive.

Despite the Bank of Japan's recent decision to raise interest rates for the first time since 2007, market sentiment suggests a delay in further rate increases.

The yen's depreciation strengthens its role in carry trades, where investors borrow in low-interest currencies to invest in higher-interest ones.

Japanese investors are seeking better returns overseas, reducing support for the yen as less money flows back into Japan.