Yen declines as BOJ expected to intervene in exchange rate

US dollar rose on Monday, and the yen remained stable near its lowest level in several decades, although the risks of interference by Japanese authorities in the exchange rate limited the rise of the US currency.

According to Reuters, the yen rose slightly and reached 151.24 to the dollar in the latest trading, after reaching its lowest level in four months at 151.86 last week and near the lowest level in 32 years at about 152 to the dollar, which it recorded in 2022.

Japan’s Deputy Finance Minister for International Affairs said on Monday that the current weakness of the yen does not reflect the performance of the real economy, reinforcing what the country’s officials have adopted in the past few days of warnings about the currency’s decline.

These moves came in the wake of the Bank of Japan raising interest rates at its policy meeting this month.

Traders believe that interest rates in Japan will remain at low levels for some time, which will maintain the large interest rate differentials with the United States.

The dollar received support from a shift in expectations for global interest rates after a series of central bank meetings and amid expectations that the Federal Reserve (the US central bank) will slow down in reducing interest rates compared to other banks.

Bets have increased that interest rate cuts will occur next June from the European Central Bank and the Bank of England after the Swiss National Bank last week became the first central bank to start a monetary easing policy this year.

This led to continued pressure on the euro and the British pound, as the euro reached $1.0817 in the latest trading, near its lowest level in three weeks.

The British pound rose 0.08% to $1.26115 after it fell by more than 1% last week following signs from the Bank of England that interest rates are imminent.

The Financial Times reported on Friday that Bank of England Governor Andrew Bailey indicated the possibility of lowering interest rates this year.

The dollar index settled at 104.34 points after achieving weekly gains of about 1% last week.

The Australian dollar rose 0.1 percent to $0.6521, while the New Zealand dollar fell slightly to $0.5993, after reaching its lowest level in four months earlier on Monday.

The yuan rebounded strongly today, Monday, after doubts about dollar sales from state-owned banks, and strong official directives from the Chinese Central Bank, with the Chinese currency reversing its direction after a sharp decline last week.

The yuan rose about 0.3 percent to 7.2083 against the dollar, while in foreign transactions it rose by more than 0.3 percent to 7.2492 per dollar.