The Japanese yen fell below 150 per dollar, a critical psychological milestone, in yen vs. dollar ratio and reached depths not seen since August 1990.
The Bank of Japan will convene for two days next week. Policymakers have ruled out raising interest rates in order to protect the currency from further depreciation.
Japan’s 10-year government bond rates broke above the 0.25% barrier that the central bank has sworn to preserve on Thursday, closing at 0.252%. The yield on the 20-year bond reached its highest level since September 2015.
On Thursday, the Bank of Japan also announced emergency bond-buying operations. It proposed to acquire 100 billion yen ($666.98 million) in Japanese government bonds with maturities ranging from 10 to 20 years, as well as another tranche of 100 billion yen with maturities ranging from 5 to 10 years.
As part of its economic stimulus efforts, the central bank has repeatedly pledged to acquire a limitless number of fixed-rate bonds in order to cap 10-year government debt rates at 0.25%.
Japanese government will take actions to stabilize the yen
According to Reuters, Japanese Finance Minister Shunichi Suzuki stated on Thursday that the government will take “necessary actions against undue volatility.”
“Recent yen falls have been swift and one-sided.” We cannot allow overly volatile fluctuations caused by speculative trading,” he warned.
Shortly after the Bank of Japan’s latest decision to keep interest rates low in order to assist the country’s sluggish economy last month, authorities admitted they interfered to protect the yen from further depreciation.
This action temporarily drove the yen to 142 per dollar. The difference between the highest and lowest intraday values was also the biggest since 2016.
The yen was trading around 159.8 versus the dollar in April 1990, having last surpassed 160 in December 1986.
Despite Japan spending up to a record 2.8 trillion yen ($19.7 billion) interfering in the foreign exchange market in September to defend its currency, the dollar has gained 30% versus the yen this year.
