By AFP

The Japanese currency, also weighed down by the Bank of Japan’s very accommodative policy, was down 0.73% and stood at 140.00 yen per dollar at 14:45 GMT.

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The collapse of the yen, which has lost more than 20% in a year, according to money changers, was due to Japan’s highly flexible monetary policy.

Contrary to the United States or Europe, where inflation has soared and reached over 10% in the UK, inflation in Japan was 2.4% year-on-year in July, very close to the 2% target for major central banks, pushing The Bank of Japan became passive.

However, a sharp drop in the yen could prompt institutions to act. “Until now, when the Bank of Japan has intervened to buy the yen, it has been around this level,” David Forrester, head of foreign exchange at Crédit Agricole in Hong Kong, told AFP.

The passive attitude of the Bank of Japan is in contrast to the firm stance of the United States Federal Reserve (Fed), which on several occasions indicated it would continue to increase its interest rates to fight inflation.

“Last week’s comments from Federal Reserve Chair Jerome Powell promising swift action to control inflation without worrying about the impact on the US economy” benefited the dollar, commented OFX analysts.

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As such, the performance of other major currencies against the greenback was also not much better: the euro fell 1.25% to US$0.9928; and the British pound fell 0.95% to US$1.1511; hovering around levels not seen since March 2020.