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Tokyo, April 25 (Jiji Press)—The dollar climbed above ¥155.50 in Tokyo on Thursday, marking the highest level since June 1990.
At 5 p.m., the greenback stood at ¥155.62-63 , up from ¥154.90-90 at the same time Wednesday.
Behind the yen’s fall versus the greenback was growing speculation over the wide gap between Japanese and U.S. interest rates amid receding hopes for an early interest rate cut by the U.S. Federal Reserve.
In the United States, recent strong economic data, such as consumer prices and retail sales, have raised concerns about a resurgence of inflation.
The yen’s drop accelerated this month as speculation grew that there would be no interest rate cut by the Fed at least until September. Many market players had expected that the Fed’s rate cut campaign would start earlier than that.
“There is no change in our determination to take appropriate measures” against the weakening yen, Japanese Finance Minister Shunichi Suzuki said at a parliamentary committee meeting Thursday.
At a press conference the same day, Japanese Chief Cabinet Secretary Yoshimasa Hayashi said: “Excessive exchange rate fluctuations are undesirable. We’ll take all possible measures while closely monitoring currency market developments.” But he declined to comment on possible intervention.
Many market players had expected that the government and the Bank of Japan would step in to prop up the yen if the dollar rose above ¥155 .
The financial authorities “may intervene anytime,” an official of a major Japanese bank said.
Meanwhile, a currency broker said that “foreign players are buying the dollar against the yen because Suzuki and Hayashi’s warnings lack a sense of urgency.”
An official of a major securities house said the possible intervention would have only a “limited impact” on the dollar-yen rates as the greenback’s current ascent against other major currencies is attributed to higher U.S. interest rates reflecting the strong U.S. economy.
The BOJ is believed to be discussing the impact of the yen’s plunge on the Japanese economy and prices at its two-day policy meeting which began Thursday. Close attention is being paid to what BOJ Governor Kazuo Ueda will say regarding the foreign exchange market at a press conference after the meeting ends Friday.
There is speculation that the Japanese central bank may reduce its purchases of Japanese government bonds to stem the yen’s decline.
