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On the 25th, the exchange rate of the yen against the US dollar in the Tokyo foreign exchange market once fell to 155.74 yen to 1 US dollar, hitting a new low in 34 years. Relevant Japanese professionals believe that the rapid depreciation of the yen will bring more uncertainty to the Japanese economy. The increase in interest rate differentials between the yen and the dollar is the main reason for the depreciation of the yen.
Hideo Kumano, Chief Economic Analyst, Dai-ichi Life Economic Research Institute, Japan: Low interest rates will continue in Japan for the time being, which is one of the pressures to depreciate the yen. There is also the reason for the dollar, which was previously said by Fed Chairman Jerome Powell that the United States will cut interest rates three times this year, but now it seems that the fear that the United States will cut interest rates once or twice or not once this year is starting to appear in the market. The U.S. dollar is attracting a lot of money, and the continued appreciation of the U.S. dollar is also one of the reasons.
Kumano pointed out that the rapid depreciation of the yen may pose a challenge to Japanese importers and exporters. For Japan, which relies heavily on imports for many categories of goods such as energy, minerals, and food, the increase in the cost of imported products will also increase the burden on consumers and raise the cost of living in Japan.
Hideo Kumano, Chief Economic Analyst of Dai-ichi Life Economic Research Institute, Japan: For import and export companies, the trend of yen depreciation is now in sight, and import prices will continue to rise, which will be very troublesome. If the yen continues to depreciate, Japan's assets may move overseas.
Kumano said the Japanese government and central bank need to take steps to stabilize the yen exchange rate while maintaining a balance in the domestic economy. He pointed out that the sharp depreciation of the yen against the dollar in the short term has brought more uncertainty to the Japanese economy. Although the Bank of Japan does not rule out any means to stabilize the exchange rate, it remains to be seen how effective it will be.
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Editor: Pan Xu