Japan's Yen Depreciation Sparks Global Concerns as US Intervenes
The Japanese economy remains a significant player in the global financial market despite Korea's narrowing economic gap with Japan over the past 81 years. Japanese companies have invested heavily abroad, and the yen's transaction at low interest rates has been ongoing for a long time.
When it comes to the won-yen exchange rate in Korea, people often focus on the '100 yen' conversion rate, but the actual exchange rate is around 890 won per 100 yen. However, this rate is calculated based on the won-dollar and dollar exchange rates, making it essential to distinguish between a weakened yen and a strengthened won.
The yen's depreciation has been of concern globally, with the US intervening directly in the market by buying yen in July. U.S. Treasury Secretary Scott Bessant explained that Asian currencies, including the South Korean won, are closely tied to the yen's value and that its weakness can lead to a decrease in price competitiveness for Korean and Chinese products.
Despite joint intervention between the US and Japan, the yen's exchange rate against the dollar has approached 160 yen again. Bessant emphasized the importance of normalizing monetary policy and further interest rate hikes by the Bank of Japan to stabilize the yen's value.