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HomeLatestYen Falls to 34-Year Low Amid Intervention Concerns
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Yen Falls to 34-Year Low Amid Intervention Concerns

The yen remained under pressure, hovering around the weaker side of 155 per dollar on Thursday, as the Bank of Japan (BOJ) commenced its two-day rate-setting meeting. Traders are on edge, speculating whether Tokyo will intervene in the currency markets while policy discussions are ongoing.

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After trading within a narrow range in recent days, the dollar breached the 155 yen level for the first time since 1990 in the previous session, reaching a 34-year high of 155.74 yen on Thursday.

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Speculation regarding potential intervention by the Japanese government to support the yen had previously hindered the dollar’s advance towards this psychologically significant level, perceived by some market participants as a threshold that could trigger action from Tokyo.

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As the BOJ convenes to deliberate on monetary policy, expectations point towards the central bank maintaining its short-term interest rate target unchanged at the meeting’s conclusion on Friday, following its recent decision to exit negative rates.

We expect the BOJ meeting to deliver a marginally hawkish hold outcome,” noted Carl Ang, a fixed income research analyst at MFS Investment Management. “April seems a little early to pivot away from the BOJ’s March communication that accommodative financial conditions will continue for the time being.”

BOJ Governor Kazuo Ueda reiterated this week that the central bank would consider raising interest rates if trend inflation moves closer to its 2% target, as anticipated.

Elsewhere in the currency market, the dollar faced some pressure against other currencies following a minor retreat earlier in the week. Positive business activity data from the euro zone and the UK boosted the euro and the pound.

The euro edged up 0.1% to $1.07085, while sterling remained steady at $1.24675. The dollar slightly declined to 105.77 against a basket of currencies but rebounded from nearly a two-week low recorded in the previous session.

Trading activity in Asia was subdued, with Australian markets closed for a holiday. The Australian dollar added 0.14% to $0.65065, supported by reduced expectations of rate cuts from the Reserve Bank of Australia (RBA) following the slower-than-expected consumer price inflation in the first quarter.

“Inflation is moderating, but it has some way to go before the RBA can be confident it will return to the 2–3% target range on the desired timetable,” stated Justin Smirk, senior economist at Westpac.

The New Zealand dollar also saw a modest increase, gaining 0.03% to $0.5937.

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