The Japanese yen is making headlines in the financial world.
On Monday, the national currency of Japan rose from its weakest level against the U.S. dollar in 30 years amid speculation that the Japanese government might have intervened to support its currency, the WSJ reports. But the yen regained strength later in the day, trading at 155.07 per dollar.
The yen’s 160.245 per dollar on Monday marked its lowest point since April 1990. Japanese markets were closed on Monday for the first day of the country’s Golden Week holiday, making it easier for authorities to influence the yen in light trading volumes, per the Journal’s report.
The Bank of Japan kept interest rates remarkably low for a long time in an effort to encourage more inflation, putting pressure on the yen. On Friday, the yen depreciated after Japan’s central bank left short-term interest rates at 0 to 0.1% in April and did not give any signals that they would rise more rapidly or consistently. This resulted in weakening the currency of the world’s third-largest economy. Importing goods and services, such as crude oil, becomes more expensive when a currency is weak.
However, some people benefit from a weak currency. For instance, when the yen is weak against the dollar, American tourists traveling to Japan have more purchasing power. In the same way, Japanese exporters increase the value of their sales made in U.S. dollars when translated back into yen. And if someone residing in the U.S. wanted to transfer money to their Japanese bank account, they would receive a larger amount in yen.
