It is reported that on October 14, the yen exchange rate against the US dollar fell to 147.66, and Japanese Finance Minister Suzuki Shunichi said the government will take "appropriate actions" against currency fluctuations.
Last month, Japan spent nearly $20 billion to support the country's troubled currency, a move that came after the yen hit a 24-year low against the dollar, marking the first time Japanese authorities intervened in the foreign exchange market since 1998.
However, financial analyst warned that as long as Japan's interest rates remain much lower than the United States, such interventions will have no impact.
U.S. Rate hike As an opportunity, the depreciation trend of the yen has been strengthening and has fallen to its lowest level in 24 years.
In recent months, the yen has been under increasing pressure, mainly because Japanese Bank has taken a completely different approach compared to Fed .
Japan Bank (Central Bank ) believes that the depreciation of yen will help increase the economic growth rate , but the decline in the actual effective exchange rate of yen means that under the combined influence of the sluggish price and the depreciation of yen in name, the yen's purchasing power has decreased. It also leads to an increase in consumer burden.
The actual effective exchange rate is the value obtained by calculating the value of currencies of each country and adjusting it after considering price fluctuations. The higher the actual effective exchange rate, the cheaper it means to purchase foreign products. BIS said that the yen's value in December 2021 was the same as the lowest level since statistics were found in 1994. The values before 1993 were calculated by the Bank of Japan.
yen
Simply put, the reason for the decline in the actual effective exchange rate of the yen is that it cannot adjust the internal and external gap in the price increase rate through the fluctuation of exchange rate . Originally, when prices rise, purchasing power will decrease, so the value of the currency will decrease. On the contrary, if prices are stable, the currency can maintain its value. From 1995 to the present
, Japan's consumer price index (CPI, comprehensive) rose only 4%, while the United States rose 84%.
On Thursday, official data showed that the U.S. consumer price increase last month exceeded expectations, indicating that the inflation struggle of the world's largest economy is far from over.
As of September, inflation (the rate at which price increases) was 8.2%, down from 8.3% in August.
As the Fed's efforts to cool inflation push up the value of the dollar and global borrowing costs, the rising consumer prices in the United States are closely watched.
yen
The US central bank has been actively raising interest rates to cope with soaring prices, which makes the US dollar more attractive to investors. By contrast, the Bank of Japan keeps interest rates at very low levels.
Big countries like the United States have inflation , and the strength of the dollar in the global financial markets has also had an impact on other major currencies around the world, including the British pound and the euro.
So everyone, your wallet may "shrink" again in the near future ~
