Yen starts falling in the upper 148 yen range per dollar due to prolonged financial tightening in the U.S.

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The Japanese yen exchange rate began to fall to the late 148 yen range per dollar on the 26th, due to the increase in long-term interest rates in the United States due to the Federal Reserve’s observation of prolonged financial tightening, leading to yen sales and dollar sales due to the widening interest rate gap between the United States and Japan.

In the Tokyo foreign exchange market, the yen exchange rate was 1 dollar = 148.81 to 148.82 yen at 8:30 a.m. on this day, down 0.38 yen compared to 5 p.m. the previous day.

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On the 25th, the US long-term interest rate reached 4.54% intraday, the highest in 16 years since October 2007.

Federal Reserve officials are encouraging the selling of the yen by making hawkish remarks one after another, such as Chicago Federal Reserve Bank President Austan Goolsby saying, “The inflation rate must be brought down to the target.”

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However, as the yen exchange rate approaches the 11-month low level of 1 dollar = 150 yen, some yen purchases and dollar sales aimed at equity adjustments are flowing in out of caution that the Japanese monetary authorities will keep the low yen in check.

The yen exchange rate was traded at 148.73 to 148.74 yen per dollar, down 0.30 yen or 0.20% at 9:36 a.m.

In the foreign exchange market in Sydney, Australia, the yen exchange rate followed the overseas market trend and started at 1 dollar = 148.75 to 148.85 yen, down 0.50 yen compared to the previous day.

Previously, on the 25th (local time) in the New York foreign exchange market, the yen exchange rate fell and closed at 1 dollar = 148.85 to 148.95, 0.50 yen lower than on the 22nd.

Due to the prospect of prolonged financial tightening, long-term interest rates in the U.S. rose and the interest rate gap between the U.S. and Japan widened, leading to active selling of the yen and buying of the dollar.

The temporary yen exchange rate was 1 dollar = 148.97 yen, which fell to the lowest level in 11 months since October last year.

As Federal Reserve officials repeatedly mentioned the need for additional interest rate increases, speculation that high interest rates would continue for a long time spread.

The yen is rising against the euro in the Tokyo foreign exchange market. At 9:34 a.m., 1 euro = 157.40 to 157.41 yen, up 0.51 yen from the previous day.

As Germany’s Ifo business index for September announced on the 25th deteriorated, selling of the euro against the yen and dollar is gaining ground due to uncertainty over the Eurozone economy.

The euro is falling against the dollar. At 9:34 a.m., 1 euro = $1.0581 to $1.0582, down $0.0057 from the previous day.

Source: Donga

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