The Japanese yen continued to weaken against a basket of currencies on Monday, hitting a nearly four-decade low against the U.S. dollar after data showed Japan’s gross domestic product (GDP) contracted more than expected in the first quarter.
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The development appears to have dampened hopes of a possible rate hike by the Bank of Japan.
Dollar, euro and pound gain ground
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The dollar gained 0.31% against the Japanese yen, selling at 161.3765 at 8:40 a.m. ET, its highest level since December 1986. At the same time, the euro climbed 0.58% by against the Japanese currency, changing hands for 173.3685, its all-time high. point since 1992, the day after the early elections in France.
The pound sterling rose 0.44% against the yen, reaching 204.3490, its highest since 2008.
Market reactions and implications
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Japan’s economy is struggling with stagnation, and recent GDP data further highlights the challenges. The GDP contraction has cast doubt on the country’s economic recovery, impacting the yen’s performance.
Analysts say the Bank of Japan may now face increased pressure to maintain its ultra-loose monetary policy, which could keep the yen under pressure for an extended period.
The broader implications of this weakening yen are manifold. In Japan, import-dependent sectors could see rising costs, which could impact consumer prices and overall economic stability.
Conversely, Japanese exporters could benefit from a weaker yen, as the prices of their products become more competitive in the international market.
Investors are closely watching the Bank of Japan’s next moves, as any signs of a policy change could have a significant impact on foreign exchange markets. For now, the yen’s decline reflects ongoing economic uncertainties and the complex interplay of global market forces.
(This is a developing story. More contributions will be added soon.)
This article was translated from English using artificial intelligence tools, then proofread and corrected by a local translator.
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