Yen Falls Again as US Yields Climb to Multi-Year Highs
The Japanese yen has been on a downward trend for months, falling to a 40-year low in late July. It traded above 163 per US dollar at that time.
A joint market intervention by Tokyo and Washington earlier this month briefly halted the decline, but the currency has since reversed half those gains and is once again approaching the 160 per US dollar threshold.
The yen's weakness is partly due to the rising US Treasury yields, which have reached multi-year highs. This has increased borrowing costs in the US and made it more likely that a persistent interest rate gap will continue between Japan and the US.
According to Gary Dugan, CEO of The Global CIO Office, 'intervention can alter positioning and disrupt momentum, but it has not changed the fundamental interest-rate differential that continues to favour the dollar.'