The king dollar is on the rise

The US dollar experienced a significant surge against the Japanese yen on September 7, 2022, marking a 24-year high against the yen and testing its strength against the euro for the first time in 20 years. The dollar reached 144.38 yen in Asian trading. Several factors contributed to the dollar’s rise.

US bond yields increased, reflecting expectations that the US central bank will maintain an aggressive monetary tightening policy. Global economic challenges are driving investors toward the relative security of the dollar. Furthermore, the European Central Bank is anticipated not to raise interest rates by 0.75 percentage points this week, given concerns about the weakness of the European economy.

The ongoing reduction in European gas supplies from Russia has also bolstered the dollar’s position. Positive data from the US services sector further encouraged the prospect of a 0.75 percentage point interest rate hike by the US central bank on September 21. The yen has weakened by 3.7 percent since the end of August, having fallen from 138.96 yen.

The Japanese yen’s value is highly sensitive to changes in US long-term interest rates. Indosuez’s investment management head of capital markets, Davis Hall, noted that the Bank of Japan may need to intervene to support the yen if the dollar continues its upward trend, potentially reaching 148 yen.

Topics: #dollar #yen #king