AFP, published on Wednesday, April 13, 2022 at 1:06 p.m.
The yen fell to its lowest level in 20 years against the dollar on Wednesday, weighed down in particular by the widening gap between Japan’s still extremely accommodative monetary policy and the Fed’s tightening on US inflation.
One dollar traded at 126.05 yen around 10:15 a.m. GMT after quickly crossing the 125.86 yen mark a few hours earlier for the first time since 2002.
The yen declines for the rapport of the dollar after the debut of 2021, at the moment when the yields of the bons of the American treasury began to increase fort, on the bottom of the vif rebond of the croissance aux Etats-Unis et du début de l’accélération de l’inflation in the country.
After losing 10% of its value against the dollar last year, the yen is back down nearly 9% since the start of 2022.
Its depreciation has increased even more in recent weeks, given the prospect of even more aggressive monetary tightening by the US Federal Reserve (Fed) than initially planned to counteract inflation at its highest level in 40 years in the United States. Joined.
Contrary to the other major central banks, the Bank of Japan (BoJ) maintains its ultralax monetary policy, considering that in Japan the macroeconomic conditions to tighten it are not yet in place.
BoJ Governor Haruhiko Kuroda also reaffirmed this course on Wednesday, which seems to have caused a new bout of yen weakness.
– An ineffective “safe haven” effect –
The Japanese economy is still reeling after the initial shock caused by the Covid pandemic in 2020, but inflation is much more subdued there than elsewhere (just 0.6% excluding fresh produce in February), even if this is also it is accelerating now, due to the increase in energy. prices.
The yen is traditionally a “safe haven” in severe market turmoil. Because despite its abysmal public debt (more than 260% of GDP according to the IMF), Japan seems like a country with strong backs: for three decades it has been the world’s leading creditor, with a net wealth abroad that weighed 3, $6 trillion by the end of 2021, according to data from the Japanese Ministry of Finance.
However, this status has not worked since the beginning of the Russo-Ukrainian conflict because high energy prices are widening the trade deficit of Japan, a major importer of hydrocarbons.
This also sinks the Japanese currency, because “oil importers have to pay in dollars and therefore need to buy dollars,” Masamichi Adachi, chief economist at UBS Securities in Japan, reminds AFP.
But the BoJ continues to view the yen’s weakness as an overall positive for the Japanese economy, in particular by improving the price competitiveness of the country’s exports and boosting corporate profits when they convert their foreign profits into yen.
This dogma, to which the government also adheres, has however begun to be debated in Japan. Because the sharp fall in the yen combined with the rise in energy prices is weakening small and medium-sized companies focused on the domestic market, as well as the purchasing power of households, whose consumption is already at half-staff.
– Sudden movements “very problematic” –
Japanese politicians multiply the declarations worried about the rapid fall of the national currency. “Exchange rate stability is important and we consider sudden movements undesirable,” government spokesman Hirokazu Matsuno repeated on Wednesday, following similar comments made the day before by Prime Minister Fumio Kishida.
Japanese Finance Minister Shunichi Suzuki underscored the point, saying on Wednesday that such fluctuations were “very troublesome.”
However, a direct intervention by Tokyo with its foreign exchange reserves to support the yen seems difficult, according to economists.
The American authorities “look favorably on the appreciation of the dollar, because their problem is high inflation,” Adachi stresses. This rules out a coordinated US-Japanese intervention, which would have a greater impact than unilateral action from Tokyo.
In addition, “it would be strange” for the Japanese government to intervene by buying yen while the BoJ maintains its ultralax policy unchanged, Tohru Sasaki, of JPMorgan Chase, also pointed out, questioned by AFP.