The Japanese yen (6J=F) has hit its weakest level against the US dollar (JP=X) since 1986. In response, Japan’s Finance Minister Shun’ichi Suzuki stated, in a report from Bloomberg: “We are strongly concerned about the impact on the economy. We will analyze the background to this move with a high sense of urgency, and take necessary action as needed.”
Yahoo Finance Senior Reporter Jared Blikre joins Morning Brief to break down the numbers behind the yen and the US dollar and what it means for foreign markets moving forward.
For more expert insight and the latest market action, click here to watch this full episode of Morning Brief.
This post was written by Nicholas Jacobino
Video Transcript
The Japanese yen, hitting its weakest level against the dollar since 1986.
We’re getting some commentary out of Japan’s finance minister saying that they will do what it takes to help support the currency.
Help support the yen.
Yahoo Finance’s Jared Licky has the breakdown there for us, Jared.
That’s right.
It’s all speculation about when that next Y intervention is going to take place.
And let me just show you the Japanese yen versus the US dollar here.
And this is the inverse of what you were just looking at in your on your where we have 100 and 60 yen to the dollar.
This shows more intuitively that a lower price means a lower yen.
And that’s what we’re seeing here.
As, uh, even the, uh, Wi Fi Interactive is sinking on me.
Now, here’s a five year chart and we can see my goodness.
Uh, that is all the way at the bottom.
In fact, if we go to a if we go to a max chart, you’re gonna find that this goes back to the late nineties.
Uh, you have to go all the way back to 1986 to find something uh, that low with respect to the yen.
So I did mention that it’s all about, uh, Wall Street trying to figure out trying to gain when the next intervention is going to take place.
That is decided by the Ministry of Finance.
And all of this comes because the Japanese have been holding their interest rates so low, um, versus the rest of the world.
You know, you look at the United States with rates north of 5%.
The Japanese just raised them for the first time in decades, and they’re at 0.1%.
So, uh, not a lot of incentive to have currency in going into the yen.
And in fact, we have something called the Kerry trade, which is when this is a very prevalent trade over the last 25 maybe longer years whereby hedge funds will borrow in the yen and invest that money in overseas markets with higher interest rates like the US All of this to say that huge trade is going to be unwound, but we don’t know exactly when in the Ministry of Finance.
Whenever they intervene, that could be a potential trigger
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