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The Japanese yen slid 1 percent against the dollar on 19 April to 0.007 cents, extending its losses for a 13th consecutive day, its longest losing streak against the buck since Bloomberg started comparing the two currencies in 1971.
The yen has since stabilized but not recovered any significant value.
The yen slipped on 19 April after James Bullard, president of the Federal Reserve Bank of St. Louis, said the Fed could increase its base interest rate by three-quarters of a percentage point at its meeting next month.
Japan’s central bank has held its interest rate at -0.10 percent since 2016. With the U.S. and other nations raising their interest rates, investors are forsaking the yen and flocking to currencies offering positive returns.
The Bank of Japan could intervene in the market—sell dollars and buy yen—but it has not done so since 2011.
Instead, the bank has preferred a weak yen that keeps exports cheaper abroad.
The government has made positive statements about the yen’s stability, but “unless Japan’s policy—monetary policy and policy related to currency—changes, verbal or physical interventions won’t be effective,” Yuji Kameoka, currency strategist at Daiwa Asset Management, told Bloomberg.
“Until the Bank of Japan (BoJ) changes its ultra-dovish stance, the monetary policy divergence argues for continued yen weakness and intervention would likely have little lasting impact,” Brown Brothers Harriman currency strategist Win Thin said in a Bloomberg interview.
On 21 April, the central bank bought more bonds to restrain interest rates, despite new data showing inflation in the country in March rose to an annual rate of 1.2 percent over the previous 12 months.
The rate is likely to reach 2 percent this month or next, analysts told the Financial Times, a pace the country has not seen since the 1990s.
The weak yen makes Japan’s imports more expensive, driving up consumer prices.
Like many other central banks, the BoJ has set 2 percent as an acceptable inflation rate.
However, it is not ready to raise its base interest rate from its current -0.10 percent, hoping to move gradually to pin inflation at 2 percent “in a stable and sustainable manner,” BoJ governor Haruhiko Kuroda said in a public statement.