The yen yesterday fell to a 24-year low and Japanese bonds tumbled, prompting a warning from the Bank of Japan (BOJ) as its easy monetary policy increasingly feels the strain of rising interest rates globally.
The currency fell more than 0.5 percent to ¥135.19 per US dollar, the lowest since Oct. 1998, as US Treasury yields extended Friday’s inflation-shock driven gains and the BOJ offered to buy more bonds to cap local equivalents.
That prompted BOJ Governor Haruhiko Kuroda to deliver his clearest warning yet that the impact of rapid slides in the currency is damaging for the economy.
Photo: Reuters
The yen has tumbled almost 15 percent this year — the worst-performing major currency — as the BOJ keeps rates anchored to boost a sluggish economy, while US yields surge on bets for continued US Federal Reserve hikes.
Friday’s shock higher-than-expected US inflation print has heaped pressure on the Fed to intensify monetary tightening, boosting the US dollar. In sharp contrast, the BOJ looks set to maintain its super-loose stance at its meeting later in the week.
“A recent rapid depreciation of the yen is undesirable and negative for the economy,” Kuroda said in response to questions in parliament. “They increase uncertainties and make it hard for businesses to make plans.”
Kuroda’s comments gave the yen some support, dragging it back from the ¥135 level.
Senior Japanese officials had already delivered a ramped-up warning on the yen’s decline on Friday, putting their concern in a written statement for the first time as they seek to keep a floor under the currency.
Kuroda yesterday underlined that message, pledging to work closely with the government. The talk of close cooperation has prompted some BOJ watchers to flag the chance of adjustments or tweaks to policy guidance at the conclusion of a meeting on Friday.
With the US Federal Reserve expected to deliver at least a half-percentage point rate hike before the BOJ meets, the downward pressure on the yen is set to continue.
The weakening yen is expected to have a mixed impact on the domestic economy, hurting household budgets, but providing a boost to exports. A further slide would increase pressure on neighboring Asian economies, which are losing out in export competitiveness.
“While Japanese authorities have stepped up warnings, there are few tools available to stop this momentum,” said Akira Moroga, manager of currency products at Aozora Bank in Tokyo. “The environment remains ripe for speculators to drive dollar-yen higher.”
With Japan’s government bond yields under severe upward pressure, the BOJ yesterday ramped up the defense of its policy targets, saying it would buy an additional ¥500 billion (US$3.7 billion) worth of five-year and 10-year bonds today.
The move came after the 10-year yield rose above 0.25 percent for the first time since January 2016, the highest since before the central bank introduced a negative rate policy and set a ceiling for the maturity.
“The BOJ will now need to explain clearly what is the logic behind the 0.25 percent cap and whether that level is appropriate under the current environment,” Daiwa Securities Co chief market economist Mari Iwashita said.
The BOJ is unlikely to adjust policy until the yen breaches ¥140 against the US dollar, a recent survey of economists by Bloomberg showed.
Stephen Garrett, a 27-year-old graduate student, always thought he would study in China, but first the country’s restrictive COVID-19 policies made it nearly impossible and now he has other concerns. The cost is one deterrent, but Garrett is more worried about restrictions on academic freedom and the personal risk of being stranded in China. He is not alone. Only about 700 American students are studying at Chinese universities, down from a peak of nearly 25,000 a decade ago, while there are nearly 300,000 Chinese students at US schools. Some young Americans are discouraged from investing their time in China by what they see
MAJOR DROP: CEO Tim Cook, who is visiting Hanoi, pledged the firm was committed to Vietnam after its smartphone shipments declined 9.6% annually in the first quarter Apple Inc yesterday said it would increase spending on suppliers in Vietnam, a key production hub, as CEO Tim Cook arrived in the country for a two-day visit. The iPhone maker announced the news in a statement on its Web site, but gave no details of how much it would spend or where the money would go. Cook is expected to meet programmers, content creators and students during his visit, online newspaper VnExpress reported. The visit comes as US President Joe Biden’s administration seeks to ramp up Vietnam’s role in the global tech supply chain to reduce the US’ dependence on China. Images on
Taiwan Transport and Storage Corp (TTS, 台灣通運倉儲) yesterday unveiled its first electric tractor unit — manufactured by Volvo Trucks — in a ceremony in Taipei, and said the unit would soon be used to transport cement produced by Taiwan Cement Corp (TCC, 台灣水泥). Both TTS and TCC belong to TCC International Holdings Ltd (台泥國際集團). With the electric tractor unit, the Taipei-based cement firm would become the first in Taiwan to use electric vehicles to transport construction materials. TTS chairman Koo Kung-yi (辜公怡), Volvo Trucks vice president of sales and marketing Johan Selven, TCC president Roman Cheng (程耀輝) and Taikoo Motors Group
New apartments in Taiwan’s major cities are getting smaller, while old apartments are increasingly occupied by older people, many of whom live alone, government data showed. The phenomenon has to do with sharpening unaffordable property prices and an aging population, property brokers said. Apartments with one bedroom that are two years old or older have gained a noticeable presence in the nation’s six special municipalities as well as Hsinchu county and city in the past five years, Evertrust Rehouse Co (永慶房產集團) found, citing data from the government’s real-price transaction platform. In Taipei, apartments with one bedroom accounted for 19 percent of deals last