US Federal Reserve Hike Drives Yen to 32-Year Low Ahead of BoJ Meeting
· World · Financial Times, Bloomberg
The Japanese yen plunged to its weakest level in over three decades against the US dollar after the Federal Reserve raised interest rates, intensifying pressure on the Bank of Japan (BoJ) ahead of its upcoming monetary policy meeting. The yen hit a record low of 151.93 per dollar on Friday, marking its steepest decline since 1990, as investors anticipated further US rate hikes. The BoJ is expected to face growing scrutiny over its ultra-loose monetary policy, which has kept borrowing costs low and contributed to the yen’s depreciation. Markets are now closely watching whether the BoJ will intervene to stabilise the currency or adjust its stance. The move underscores the global divergence between US monetary tightening and Japan’s prolonged easing. Analysts warn that further yen weakness could fuel inflation pressures domestically.
Why it matters
Weakening of the yen directly impacts Japan’s import costs, raising prices for Indian businesses and consumers reliant on Japanese goods like electronics and automobiles. It also complicates the BoJ’s efforts to balance economic growth and inflation, with potential spillover effects on global markets and India’s trade dynamics, particularly in sectors like oil and commodities.
Read the original report — Financial Times
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