USD/JPY breaks through 160.00 amid no currency intervention
USD/JPY surpasses 160.00, reaching a 30-year high without signs of intervention from Japan's Ministry of Finance. Explore the reasons behind the yen's weakness and the implications for traders and the global economy.
Key points
- USD/JPY hit 160.00 early Wednesday morning and traded higher through the US session
- Today's prices are the highest seen since 1986
- Japanese officials have yet to comment on the move or personally intervene in currency markets
Japanese yen weakest since 1980s
The USD/JPY exchange rate has reached a new 30-year high, marking a continued period of weakness for the Japanese yen. USD/JPY has appreciated over 12% year-to-date, and currently trades above 160.50 for the first time since 1986. This trend reflects ongoing economic challenges in Japan compared to the United States, where the USD continues to perform strongly. Such highs are significant as they affect both import costs and export benefits within Japan’s economy.
No signs of Japanese intervention to lift JPY
Despite the Japanese yen's sustained low levels, there has been no recent indication that Japan's Ministry of Finance will intervene as it has in the past. In previous years, the ministry has purchased yen in an effort to boost its value and stabilize the economy. The MoF stepped in as recently as two months ago, with little success. Current market conditions and government strategies, however, seem to reflect a period of observation rather than direct action.
Does currency intervention work?
While Japan has historically intervened in the currency market to try boosting the yen, these measures have often had limited long-term success. Short-term effects are sometimes noticeable; for example, yen values may spike temporarily following intervention. However, underlying economic issues or global market forces often diminish these effects over time.
Why is Japanese yen so weak?
The weakness of the Japanese yen can largely be attributed to prolonged economic stagnation in Japan, characterized by low growth rates despite zero percent interest rates and a continuously expanding balance sheet. These factors contribute to the yen’s reduced strength on the global stage, especially in forex markets where the yen is priced relative to high-performing countries.
Should you buy Japanese yen?
Deciding to buy Japanese yen requires careful consideration of several economic indicators. For the yen to strengthen significantly against the dollar, we would need to see an improvement in Japanese economic data or a weakening in US economic performance — or both. Traders should monitor these trends closely to make informed decisions.
How to trade USD/JPY
- Open an account to get started, or practice on a demo account
- Choose your forex trading platform
- Open, monitor, and close positions on USD/JPY
Trading forex requires an account with a forex provider like tastyfx. USD/JPY can be found in tastyfx's platform under the 'Major' pairs tab. Many traders also watch major forex pairs like GBP/USD and AUD/USD for potential opportunities based on economic events such as inflation releases or interest rate decisions. Economic events can produce more volatility for forex pairs, which can mean greater potential profits and losses as risks can increase at these times.
You can help develop your forex trading strategies using resources like tastyfx’s YouTube channel. Once your strategy is developed, you can follow the above steps to opening an account and getting started trading forex.
Your profit or loss is calculated according to your full position size. Leverage will magnify both your profits and losses. It’s important to manage your risks carefully as losses can exceed your deposit. Ensure you understand the risks and benefits associated with trading leveraged products before you start trading with them. Trade using money you’re comfortable losing.