The yen fell to the 155-to-1 dollar range

The Japanese yen fell to the 155 yen/dollar range on November 12th in the foreign exchange market. This was the first time the yen had fallen to this level in about nine months since February 4th. With the US government shutdown nearing its end, the market generally believes that the downward pressure on the US economy will ease, thus favoring the purchase of dollars.

The US Senate passed a temporary budget bill on November 10th aimed at ending the longest government shutdown in history. The bill is expected to be voted on in the House of Representatives soon, and the market generally believes that the US government shutdown will be lifted.

The yen had been hovering around 147 yen/dollar at the end of September, depreciating by more than 7 yen in just one and a half months. Many believe that Sanae Takaichi, after becoming Prime Minister, will implement expansionary fiscal policies, a view that has also prompted investors to sell yen against various currencies. On November 12th, the yen fell to the 179 yen/euro range, a new low since the euro’s inception in 1999.

Some market observers believe that when the yen depreciates to above 155 yen to the dollar, the likelihood of the Japanese government and the Bank of Japan (central bank) intervening in the foreign exchange market by buying yen increases. Japan has maintained one of the lowest policy interest rates among major countries, lacking factors to drive yen buying. The focus going forward may be on whether figures like Satsuki Katayama, the Japanese Minister of Finance, will strengthen verbal intervention to curb the yen’s depreciation.