#YenSlidesToFourDecadeLow
The USD/JPY pair has breached the psychologically significant level of 160 and is trading in the range of 160.60-160.80. We haven't seen these levels since 1986-1990.
What’s pushing the yen down?
Divergence in rates: The US Fed is keeping rates high (3.50%-3.75%), and market expectations are rising for further hikes due to stubborn inflation. Meanwhile, the BoJ has raised its rate to 1%, but it still remains microscopic compared to the US. Big capital is simply flowing to where the yields are higher.
"Sanaenomics" and national debt: Prime Minister Sanae Takaichi's $137 billion economic stimulus program is ramping up domestic inflation, while Japan’s colossal national debt prevents the central bank from aggressively hiking rates.
Ineffective interventions: The Japanese Ministry of Finance regularly states its "readiness to take action at any time," but previous dollar injections only temporarily cooled speculative fervor, after which the trend of the yen's decline resumed.
For traders, the 160 mark remains a "line in the sand" - an area of extreme volatility where a massive intervention from Japanese authorities could start at any moment.
The USD/JPY pair has breached the psychologically significant level of 160 and is trading in the range of 160.60-160.80. We haven't seen these levels since 1986-1990.
What’s pushing the yen down?
Divergence in rates: The US Fed is keeping rates high (3.50%-3.75%), and market expectations are rising for further hikes due to stubborn inflation. Meanwhile, the BoJ has raised its rate to 1%, but it still remains microscopic compared to the US. Big capital is simply flowing to where the yields are higher.
"Sanaenomics" and national debt: Prime Minister Sanae Takaichi's $137 billion economic stimulus program is ramping up domestic inflation, while Japan’s colossal national debt prevents the central bank from aggressively hiking rates.
Ineffective interventions: The Japanese Ministry of Finance regularly states its "readiness to take action at any time," but previous dollar injections only temporarily cooled speculative fervor, after which the trend of the yen's decline resumed.
For traders, the 160 mark remains a "line in the sand" - an area of extreme volatility where a massive intervention from Japanese authorities could start at any moment.