The Japanese yen faced rapid depreciation today, approaching levels not seen in 33 years, following signals from Federal Reserve Chairman Jerome Powell that interest rate hikes may continue amid concerns about persistent inflation. The yen traded at 151.44 against the US dollar, showing a slight 0.06% increase from the previous session.
On Thursday, Powell reiterated hawkish views on interest rates, challenging market expectations that had predicted rate cuts in 2024. His comments underscored doubts about achieving the Fed's 2% inflation target with the current policy framework, leading the market to reconsider the potential for rate cuts in mid-2024 from June to July.
This stance contributed to the yen's worst performance since August, with a monthly decline of 1.42%. The currency's notable slide over the past month hit a one-year low of 151.72 against the dollar on October 31 and is now approaching levels not seen since 151.96.
The sharp decline of the yen has drawn the attention of Japan's Ministry of Finance (MOF), raising growing concerns about the need for intervention in the currency market to stabilize the yen and minimize potential impacts on the Japanese economy. The MOF closely monitors these developments as currency exchange rates hover near a crucial level that previously prompted official action.