(Bloomberg) — The yen fell to a 24-year low Monday as Japan’s easy monetary policy increasingly stood at odds with developed peers hiking rates.
The currency fell more than 0.5% to 135.19, the lowest since Oct. 1998, as Treasury yields extended Friday’s inflation-shock driven gains. It has tumbled almost 15% this year — the worst-performing major currency — as the Bank of Japan keeps rates anchored to boost a sluggish economy while US yields surge on bets for continued Federal Reserve hikes.
Friday’s shock higher-than-expected US inflation print has heaped pressure on the Fed to intensify monetary tightening, boosting the dollar. Before it hit, senior Japanese officials delivered a ramped-up warning on the yen’s decline, putting their concern in a written statement for the first time as they seek to keep a floor under the currency.
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.
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