The yen falls to a new 24-year low against the US dollar

  • Japanese PM says BoJ should maintain ultra-accommodative monetary policy
  • Euro up after ECB official opens door for bigger rate hike in September
  • Pound gains after hawkish comment from BoE official

LONDON/NEW YORK, June 21 (Reuters) – The Japanese yen plunged against the U.S. dollar on Tuesday to its lowest level since October 1998, as the Bank of Japan’s ultra-loose monetary policy contrasted sharply with an aggressive Federal Reserve determined to crush galloping inflation.

The yen fell to a fresh 24-year low of 136.330 to the dollar, extending losses that have already seen it lose more than 18% of its value against the greenback this year.

“You’re still looking at a trade where there’s aggressive tightening from the Fed while the BoJ hasn’t really moved yet. There’s potential here to see another leg of Yen weakness. “said Edward Moya, principal market analyst, at OANDA in New York.

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The currency lost further ground after the BoJ dashed any expectation of a policy shift on Friday and continued to stand out among other major central banks in its commitment to ultra-loose monetary settings. Read more

Instead, he stepped up his bond buying to keep 10-year yields within a targeted range of 0% to 0.25%. But despite his efforts, the yield remains at the upper end of this target.

Earlier in the day, Japanese Prime Minister Fumio Kishida effectively gave the green light to selling the yen when he said the BoJ should maintain its ultra-accommodative monetary policy.

He dismissed calls for the policy to be changed to target the rising cost of living. Read more

The yen’s decline was also accelerated by some stop-loss orders broken around the 135.60 level, analysts said, who noted New York traders were absent on Monday, a U.S. holiday.

By mid-morning, the Japanese currency was at 136.20 yen per US dollar, just past the lowest in 24 years. The yen also fell 1.3% to 143.77 per euro, its lowest level since June 9.

The yen lost more than any other major currency against the greenback as the BoJ’s dovish policy stance deviated from the general hawkish policy of global policymakers.

fall of the yen

In other currencies, the dollar index fell 0.2% to 104.23, with the euro strengthening on the day to $1.0553, up 0.4%.

Europe’s single currency rose after European Central Bank chief economist Philip Lane said the ECB would raise interest rates by 25 basis points at its July meeting, but the scale of the its September rise is yet to be determined, suggesting that a larger 50 basis point hike could be in the cards.

The pound also rose against the dollar, rising 0.4% to $1.2290 on hawkish comments from Bank of England policymakers.

BoE chief economist Huw Pill said on Tuesday that the central bank should raise interest rates further in the near future to combat soaring inflation. Read more

The Australian dollar rose 0.4% to hit US$0.6977 after Reserve Bank of Australia Governor Philip Lowe signaled much stronger policy tightening going forward, although downplayed the chances of an oversized 75 basis point rate hike. Read more

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Currency bid price at 10:00 a.m. (1400 GMT)

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Reporting by Samuel Indyk in London and Gertrude Chavez-Dreyfuss in New York; Written by Saikat Chatterjee; Editing by Sujata Rao and Jonathan Oatis

Our standards: The Thomson Reuters Trust Principles.


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