Japan’s Yen Dips To 15-Year Low

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Japan's Yen Dips To 15-Year Low
Japan's Yen Dips To 15-Year Low

The Japanese Yen has continued a rapid descent on Tuesday, May 2, reaching a 15-year low as against the euro, which is caused by the recent decision by the Bank of Japan to continue to use ultra-low interest rates which caused a ripple effect after the decision was made.

Meanwhile, the dollar gained as much as 0.23% reaching 137.78 yen for the first time since March 8, which if it gets to 137.90 would mark the highest amount recorded so far.

Although the yen’s levels versus European currencies were dramatic. The euro in early trade on Thursday reached 151.42 yen, which is a new high since September 2008. The Sterling hits its highest since early 2016, while the Swiss France was at its highest against the yen since 1982, according to data from Refinitiv

Chief Japan macro strategist at Nomura Securities, Naka Matsuzawa, said “The sign that the BOJ is not going to change its negative interest-rate policy any time soon gave the green light for speculators to put yen carry trades back on,”.

During trades, investors usually borrow in low-yielding currencies to invest in higher-yielders, and with Japanese rates close to zero, the yen has been of advantage to investors to get money to fund such trades.

Matsuzawa added that “The odds of the Fed continuing on the rate hike process, rather than rate cuts, is now a bit higher,”