In a recent turn of events, the Japanese yen plummeted to its weakest point since 1990 during Wednesday’s trading session, reaching a level that previously prompted the Japanese government to intervene in 2022. This significant drop led to an immediate reaction from Japan’s finance minister, who indicated that the country is prepared to take “decisive steps” to curb any unwarranted fluctuations in the currency’s value.

During the Asia trading hours, the dollar peaked at 151.97 yen, marking its highest value against the yen since the middle of 1990. It later settled slightly lower at 151.42, down by 0.12%.

The intervention signals were echoed by Finance Minister Shunichi Suzuki, using phrasing reminiscent of the 2022 actions when Japan intervened at the exchange rate of 151.94 yen. Further, an announcement of upcoming discussions between the finance ministry, the Bank of Japan, and the Financial Services Agency, set for 0915 GMT on Wednesday, momentarily bolstered the yen.

So far, the yen has depreciated by over 7% in the current year, largely due to the expanding discrepancy between bond yields in the U.S. and Japan, a gap that Japan’s modest interest rate increase last week did little to narrow.

Strategists, like Rodrigo Catril from National Australia Bank, highlight the market’s acute sensitivity to the yen approaching the 152 level, suggesting a strong possibility of governmental intervention if this threshold is breached.

Concurrently, the dollar has been advancing towards quarterly gains as investors adjust their expectations regarding significant interest rate reductions, influenced by persistent economic resilience in the U.S. and central bankers’ cautious stance. The dollar index has seen a roughly 3% increase, standing at 104.27.

Global Currency Dynamics

Attention this week is predominantly on the forthcoming U.S. core inflation data set for release on Good Friday. Preliminary signals of this focus were evident when an unexpected rise in U.S. durable goods orders led to a modest uplift in the dollar’s value, further pressuring the yen.

Other currencies are also feeling the strain of a potent U.S. dollar. The Chinese yuan, for instance, closed at its weakest since November 2023 at 7.2284. Meanwhile, the Euro and Sterling held steady, with the former unaffected by slightly lower-than-expected Spanish inflation data for March.

Guy Miller of Zurich Insurance group remarked on the surprising resilience of the U.S. economy and the consequent unwinding of bets against the dollar by investors, bolstering its strength.

In Sweden, the dollar initially strengthened against the crown following the central bank’s rate hold announcement and hints at potential rate cuts. However, it eventually relinquished these gains.

The Swiss franc is navigating its lowest levels since November, particularly after an unexpected rate cut last week, depreciating by approximately 7% this year.

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