The Japanese yen weakened above 1[ads1]50 against the US dollar, a key psychological level, reaching levels not seen since August 1990.
The Bank of Japan’s two-day meeting is scheduled for next week. Politicians have ruled out an interest rate hike to defend against further weakening of the currency.
On Thursday, Japan’s 10-year government debt interest rates breached the ceiling of 0.25% that the central bank promised to defend – most recently at 0.252%. The yield on the 20-year bond also rose to the highest since September 2015.
The Bank of Japan also announced emergency bond purchases on Thursday. It offered to buy 100 billion yen ($666.98 million) worth of Japanese government bonds with maturities of 10-20 years and another tranche worth 100 billion yen with maturities of 5-10 years.
The central bank has repeatedly promised to buy an unlimited number of fixed-rate bonds to cap 10-year government debt yields at 0.25% as part of its stimulus measures for the economy.
On Thursday, Reuters reported that Japanese Finance Minister Shunichi Suzuki said the government will take “appropriate steps against excess volatility.”
“Recent rapid and one-sided yen falls are undesirable. We absolutely cannot tolerate excessively volatile movements driven by speculative trading,” he said.
Levels ‘not destabilizing’
Asked how worrying it is that USD/JPY is reaching levels around 150, ANZ chief economist Richard Yetsenga said he is “not too concerned.”
“I don’t think we’re about to destabilize currency territory yet,” he said on CNBC’s “Squawk Box Asia.”
“There are a lot of emotional words around it, but what problems has it created?” he said.
Shortly after the Bank of Japan’s latest decision to keep interest rates low to support the country’s sluggish economy last month, officials confirmed they were intervening to support the currency against further weakness.
That intervention pushed the yen to 142 against the dollar. The spread between intraday highs and lows was also at its widest since 2016.
In April 1990, the yen traded around 159.8 against the dollar and last breached 160 in December 1986.