The Japanese yen has continued to fall this week, hitting new lows against the euro, pound and other currencies, as investors look for better returns outside Japan. The yen is currently the worst-performing G10 currency of the year, having fallen 6.4% against the dollar, in contrast to being the best-performing currency.
Against the euro, the yen fell 0.6% this week, hitting a three-month low at 163.45 per euro. Likewise, it fell by a similar margin against sterling, marking its lowest since late 2015 at 190.83. The yen also hit a nine-year low against the Australian and New Zealand dollars.
Despite these significant fluctuations, the yen's decline against the dollar was relatively modest, with a 0.1% gain for the dollar, trading at 150.41 yen. This modest change is attributed to the potential risk of Japanese market intervention, as officials recently reminded traders of their readiness to act.
Investors are taking advantage of the interest, or carry, that can be earned by borrowing yen at approximately 0% interest and investing in income-earning assets denominated in other currencies. The strategy is currently profitable due to low volatility in foreign exchange markets and the rollback of expectations of deep interest rate cuts in the US, Europe and UK, which maintain higher yields.
Against the euro, the yen fell 0.6% this week, hitting a three-month low at 163.45 per euro. Likewise, it fell by a similar margin against sterling, marking its lowest since late 2015 at 190.83. The yen also hit a nine-year low against the Australian and New Zealand dollars.
Despite these significant fluctuations, the yen's decline against the dollar was relatively modest, with a 0.1% gain for the dollar, trading at 150.41 yen. This modest change is attributed to the potential risk of Japanese market intervention, as officials recently reminded traders of their readiness to act.
Investors are taking advantage of the interest, or carry, that can be earned by borrowing yen at approximately 0% interest and investing in income-earning assets denominated in other currencies. The strategy is currently profitable due to low volatility in foreign exchange markets and the rollback of expectations of deep interest rate cuts in the US, Europe and UK, which maintain higher yields.
