The Japanese yen soared Thursday to its highest level in 17 months despite efforts by the Bank of Japan to lower the value of the currency to stimulate the country’s export-driven economy. Concern about global growth has sent buyers to the perceived safety of the Japanese currency.
The yen was up to 108.76 to the U.S. dollar early Friday in Tokyo, its highest level since October 2014, when the Bank of Japan implemented a second round of aggressive asset buying that introduced more local currency into the markets.
The yen was surging for the sixth straight day after gaining as much as 1.7 percent against the dollar on Thursday. The yen is up about 10 percent against the dollar this year.
“We’re watching the foreign exchange market with a sense of tension, and we’ll take measures as appropriate,” Yoshihide Suga, the chief Cabinet secretary, said at a news conference, as reported by the Financial Times. “The government believes excessive and disorderly movements in the exchange rate have a negative effect.” A senior official at the Finance Ministry echoed Suga’s remarks.
Exacerbating the problem is U.S. monetary policy. U.S. Fed Chair Janet Yellen has indicated a slower pace of interest rate hikes this year, which has weakened the dollar, making U.S. exports more competitive. Concerns that British voters will leave the European Union has weakened the pound. And like Japan, the eurozone is struggling to fight off the risk of deflation and has implemented measures to weaken the euro.
The Bank of Japan recently dipped into negative interest rate territory in an effort to stimulate lending that would spur growth. The central bank next meets April 28 and analysts expect further measures to curb the rise of the yen.