Yen Weakens Past 140 Per Dollar
The Japanese yen weakened past 140 per dollar for the first time in more than two years as bets on a Federal Reserve rate hike spurred U.S. yields higher.
The yen dropped 0.3 percent to 140.14 per dollar as of 11:30 a.m. in Tokyo, the weakest level since April 2018. The currency has weakened for four straight days, the longest stretch since February.
Fed Rate Hike Bets
The yen’s decline comes as bets on a Fed rate hike have increased. The central bank is widely expected to raise rates at its June meeting, and futures traders are pricing in a full quarter-point increase.
The yield on 10-year Treasuries rose to 1.68 percent, the highest since February 2020. The yield on two-year notes rose to 0.17 percent, the highest since March 2020.
Yen’s Decline
The yen’s decline has been driven by a combination of factors. The Bank of Japan has kept its benchmark rate at minus 0.1 percent, while the Fed is expected to raise rates.
The yen has also been hurt by the country’s weak economic data. Japan’s economy contracted in the first quarter of the year, and the government has warned that the outlook remains uncertain.
Yen’s Impact on Exports
The weaker yen has had a positive impact on Japan’s exports. The country’s exports rose for the first time in five months in April, driven by strong demand for cars and electronics.
The weaker yen has also helped to boost the stock market. The Nikkei 225 index rose to its highest level since February 2020 on Monday, and is up more than 10 percent this year.
Yen’s Outlook
Analysts expect the yen to remain weak in the near term. The Bank of Japan is expected to keep its benchmark rate at minus 0.1 percent, while the Fed is expected to raise rates.
The yen could also be hurt by the country’s weak economic data. Japan’s economy contracted in the first quarter of the year, and the government has warned that the outlook remains uncertain.
Yen’s Impact on Investors
The weaker yen has had a positive impact on investors. The Nikkei 225 index rose to its highest level since February 2020 on Monday, and is up more than 10 percent this year.
The weaker yen has also helped to boost the stock market. Japanese stocks have outperformed their global peers this year, and the Topix index is up more than 15 percent.
Yen’s Impact on Currency Markets
The weaker yen has had a ripple effect on other currency markets. The euro has gained against the yen, rising to its highest level since April 2018.
The Australian dollar has also gained against the yen, rising to its highest level since February 2018. The Australian dollar has been boosted by strong economic data and rising commodity prices.
Yen’s Impact on the Economy
The weaker yen has had a positive impact on the economy. The weaker currency has helped to boost exports, and the country’s exports rose for the first time in five months in April.
The weaker yen has also helped to boost the stock market. Japanese stocks have outperformed their global peers this year, and the Topix index is up more than 15 percent.
Conclusion
The Japanese yen has weakened past 140 per dollar for the first time in more than two years as bets on a Federal Reserve rate hike spurred U.S. yields higher. The yen’s decline has been driven by a combination of factors, including the Bank of Japan’s low benchmark rate and weak economic data. The weaker yen has had a positive impact on the economy, boosting exports and the stock market. The currency’s decline has also had a ripple effect on other currency markets, with the euro and Australian dollar gaining against the yen.