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Yen weakens on trade-weighted basis, stoking inflation worries in Japan
Bank of Japan officials have spent ¥11.73 trillion intervening from April 28 to May 27, yet the yen still reached 40-year lows versus the dollar.
Japan’s yen weakness is extending beyond its drop against the US dollar, with a broader trade-weighted measure of the currency hitting fresh record lows, a sign of widespread erosion against the euro, sterling and several Asian peers, LiveMint Markets reports, citing Bloomberg.
The Bank of Japan’s nominal effective exchange rate index continues to slide, highlighting concerns that a weaker trade-weighted yen could raise the cost of imports and complicate efforts to normalize monetary policy without undermining Japan’s economic recovery.
Authorities spent ¥11.73 trillion, about $71.9 billion, intervening in foreign exchange markets between April 28 and May 27, but the yen still slid to its lowest level since 1986 versus the dollar. The yen was down 0.4% versus the dollar at around 163.78 as of 2:30 p.m. New York time, the report said.
Neuberger portfolio manager Ugo Lancioni said the yen’s real value, not just versus the dollar but against a basket of currencies, has continued to decline and could become a concern for authorities. The story also notes Bloomberg reported Japanese central bank officials are open to raising interest rates faster than the economists’ consensus, with policymakers having last month raised the benchmark rate to 1%.