Yen Exchange Rate Dropped to the Low 135 Yen per Dollar; Long-Term Interest Rates Temporarily Rose to 0.255%

1. Yen Exchange Rate Dropped to the Low 135 Yen per Dollar
In the Tokyo foreign exchange market on June 13, the yen temporarily dropped to the low 135-yen per dollar level, the weakest level in about 24 years since 1998, NHK reported on June 13. A market source commented, “While the U.S. central bank is tightening monetary policy to curb inflation, Bank of Japan (BOJ) plans to continue its current large-scale monetary easing, and the yen is likely to continue to sell off due to the view that the interest rate gap between the U.S. and Japan will be kept. Under these circumstances, the market is keenly interested in how the government and the BOJ will respond to the yen’s depreciation”.
2. Long-Term Interest Rates Temporarily Rose to 0.255%
NHK reported on June 13 that Japanese Government Bonds (JGBs) were sold and long-term interest rates temporarily rose to 0.255% on the 13th. Bank of Japan (BOJ) has set the upper limit of the long-term interest rate at “around 0.25%” and announced that it would conduct temporary purchases of JGBs on the 14th to curb further rises. A market source said, “With fixed-rate purchase operations being conducted every day in principle, selling JGBs in the market at yields above BOJ’s specification would result in a loss for investors, but with the yen weakening rapidly, speculation that BOJ might move to modify its monetary easing policy led to selling of JGBs”.