What this means is even more selling of US bonds, to a market that does does not want them thanks to President Biden and this government’s spending policies.
The Japanese yen recently plunged to a near-38-year low against the U.S. dollar, hitting 160.82, according to data from FactSet. This marked a significant drop, surpassing the previous low of 160.03 recorded on April 29 and reached a level not seen since 1986. This significant decrease has fueled speculation that the Japanese authorities might once again intervene in the currency markets to stabilize the yen.
Asian markets fall as #Yen hits a 38-year low against the Dollar. @Reematendulkar with all the big events lined up today pic.twitter.com/ANfTZB7X1g
— CNBC-TV18 (@CNBCTV18News) June 27, 2024
Historically, when the yen previously breached the 160 threshold, it resulted in a dramatic recovery within the same trading session, leading market analysts to ponder the likelihood of governmental intervention. Indeed, Japan’s Ministry of Finance has confirmed a prior intervention in May, having expended approximately 9.7885 trillion yen ($62.25 billion) from late April through May to manage currency volatility. This intervention was the first of its kind since October of the previous year.
OOPS! #Japan‘s Yen weakens beyond 160 per Dollar, the weakest level since 1986. pic.twitter.com/hPh0PNjvKf
— Holger Zschaepitz (@Schuldensuehner) June 26, 2024
Carol Kong, an economist and currency strategist at the Commonwealth Bank of Australia, suggests that conditions are ripening for another intervention. She points out that the upcoming release of U.S. personal consumption expenditures data for May could serve as a trigger. If this data reveals stronger economic activity than anticipated, it could exert further upward pressure on the U.S. dollar against the yen, thereby potentially prompting Japan to take action.
The continued depreciation of the yen has not gone unnoticed by Japan’s top currency officials. Masato Kanda, a senior currency diplomat, has recently expressed significant concern over the rapid devaluation of the yen, describing the situation as alarming and under close surveillance. He indicated that the weakness in the yen appears to be driven more by speculative trading rather than economic fundamentals. In response, Kanda emphasized that the Japanese authorities are prepared to combat any undue market volatility to stabilize their currency.
NEW: The yen weakens to the lowest level against the dollar since 1986 https://t.co/RdrgEsgq7a pic.twitter.com/zFIXow4yxt
— Bloomberg Markets (@markets) June 26, 2024
If President Biden and the Democrats are allowed to continue to destroy the U.S> dollar by spending the nation into insane debt, this situation will get far worse over the coming months.
Major Points:
- The Japanese yen reached a nearly 38-year low, dropping to 160.82 against the U.S. dollar.
- This drop surpassed the previous low of 160.03 set in late April and is the weakest since 1986.
- Historical data shows that past breaches of the 160 level were met with sharp rebounds, possibly due to government intervention.
- Japan’s Ministry of Finance confirmed spending approximately 9.7885 trillion yen on currency interventions from late April through May to stabilize the yen.
- Continued yen depreciation has led to heightened vigilance from Japanese authorities, with potential further interventions anticipated if volatility persists.
Kirk Volo – Reprinted with permission of Whatfinger News
