The Japanese yen has dropped to a 40-year low against the US dollar, putting investors on watch for potential government intervention by Japan that could ripple through US stocks, the Treasury market, and the broader global economy.
Causes of the Decline
The yen’s decline to its lowest level since 1986 has been fueled by a recent shift in expectations for US interest rates, largely due to the war with Iran, and a rebound in the dollar.
Traders are betting the US Federal Reserve will likely hold rates steady, or even increase them, in the coming months, to combat inflation spurred by the oil shock from the US-Iran war.
Potential Intervention
The Japanese government could boost its currency by selling US dollars or assets denominated in dollars, like US Treasuries, and then buying yen. Intervention could come as soon as this weekend.
A jump in the yen could move financial markets by putting pressure on the dollar and Treasuries.
Original reporting: KTVZ (Central Oregon) — read the source article.
