The yen coin has been approaching a value of 150 to the dollar recently, making investors very nervous about the future of the Japanese currency. It seems like the time is ripe for the Japanese central bank to intervene. However, it seems like they are not planning to do anything for now. In fact, carrying out any concrete plans might be rather difficult for the Japanese authorities right now.
The yen has dropped somewhat over the course of September, devaluing by 3%. This puts it at its weakest point for 11 months, putting the yen conversion rate at 149.71 to the dollar as of Wednesday. In the inverse, 1000 yen to USD would be $6.71. The US has been very hawkish with its own monetary policy, which makes the BoJ uncertain. Hence, the BoJ has been putting off any decisions on its negative interest rates. In fact, the Fed may tighten even further than they already have.
Yen Coin at Risk: Concerns Over BoJ’s Reluctance
The BoJ governor has stated that they do not expect to make sharp tightening moves. In the following months, he said we should expect a slow change to the current policy. Making sudden moves could be dangerous for the Japanese economy and the yen conversion rate. They have an enormous reserve of dollars in their market, so they have to be sensitive about how outside changes can affect their currency.
Some are unhappy with the reluctance to do anything and have started speaking out. Economies across the world have been making rate hikes and keeping high interest rates generally. It is only natural that the yen would suffer against other currencies in such circumstances. Such analysts worry about current conditions and the implications it could have for the Japanese economy. If the yen coin reaches 150 to the dollar, that is a red line that it would cross in their eyes. This would have big implications for imports, as fuel and food costs would then rise.
