Weakness in the yen is broadening with a trade-weighted gauge of the currency falling to the lowest in more than two decades.
Deutsche Bank AG’s measure of the yen’s strength versus its global trading peers closed at a record low Monday, according to data going back to 2000. The currency has found itself caught once more in the widening gap between the Bank of Japan’s super-easy monetary policy and the hawkish shift seen in counterparts in Europe and the US.
The move will add to expectations of at least more verbal intervention to help stabilize the currency. Japan’s finance minister Shunichi Suzuki said Tuesday he continues to closely watch market moves and will take appropriate action on FX policy as necessary.
The yen slipped 0.1% to around the 142.10 per dollar level, a seven-month low against the greenback.
“Actual intervention is unlikely now but risks may become more real when it drops beyond 145 and 150 at a fast pace,” said Tsutomu Soma, a bond and currency trader at Monex Inc. in Tokyo. “The European currency crosses look most bullish versus the yen.”
Last week, the Federal Reserve signaled it may resume tightening after a June pause, the European Central Bank hiked and suggested more is likely in July, while traders expect the Bank of England to lift rates on Thursday. In contrast, the BOJ kept a dovish tone at its latest meeting.
(Updates with Suzuki comments)
