Japanese Yen Hits 20-Year Low as US Yields Rise

The dollar-yen exchange rate fell to a 20-year low earlier today, helped by strong US Treasury rates and perhaps positive economic reports from the United States. At 127.44 yen in the Asian trading session, the dollar was at its peak point since May 2002. It has gained 4.5% against the Japanese yen so far in April, the second-largest monthly percentage growth since 2016 following March’s 5.8%. Furthermore, the greenback remained strong versus almost all other currencies, and the dollar index hit a two-year peak of 100.8.

Carol Kong, FX strategist at Commonwealth Bank of Australia, said “As a result of the Ukraine conflict, we’ve witnessed an increase in energy costs in the Eurozone, which has had an influence on the greenback’s overall trajectory.”

She went on to say that she was keeping an eye on Friday’s purchasing manager datasets, which would be released in numerous markets.

“PMI statistics in the eurozone and others might cause markets to lower their economic forecasts, but I do not even anticipate the US PMI to be very dismal, so we’ll likely witness some variance there, which will likely help the dollar.” she said.

“Anyway course, rising US bond rates have been the main factor of the dollar yen.”

Monday’s peak of 2.884 percent for the benchmark U.S. 10-year Treasury yield remained in place on Tuesday, whereas the Bank of Japan has indeed been interfering to maintain the return on Japanese 10-year government bonds at 0% or below.

A weaker yen might have an impact on Japan’s economy, Finance Minister Shunichi Suzuki warned Tuesday, echoing prior statements by various lawmakers and bureaucrats. Stability in foreign exchange markets is crucial. A two-year bottom of $1.0756 was reached by the euro, which was trading at $1.0776; the pound, which was trading at $1.3006, was also weak, with the new conflict in Ukraine not helping.

Ukraine claimed that Russia has begun a long-anticipated attack in the country’s east. After Monday’s one-month nadir of $0.7355, the Australian dollar rose slightly to $0.7355. Following a one-month trough of $38,547, Bitcoin managed to regain its footing on Tuesday, trading at $40,800.