Tokyo, 16 September, /AJMEDIA/
The U.S. dollar plunged to the 139 yen zone Monday in Asian trading, hitting its lowest level in over a year, amid growing expectations that the Federal Reserve will cut interest rates by half a point later this month.
The U.S. currency slipped to the mid-139 yen zone, its lowest level since July 2023, in the run-up to the Fed’s two-day policy meeting from Tuesday. Japanese financial markets were closed Monday due to a national holiday, making trading thin across the board.
The dollar was also pressured by remarks by Bank of Japan policy board members earlier this month that indicated a positive stance toward higher interest rates. The BOJ will hold a two-day policy meeting from Thursday.
At 5 p.m., the dollar fetched 139.87-88 yen compared with 140.89-92 yen in Tokyo at 5 p.m. Friday. The euro was quoted at 155.47-49 yen against 156.29-33 in Tokyo late Friday afternoon.
Late last week, The Wall Street Journal reported that the U.S. central bank is likely to reduce rates by 0.5 percentage point from the current 5.25-5.50 percent, the highest level in 23 years, in a bid to prevent a sharp slowdown in the world’s biggest economy.
The BOJ, meanwhile, is expected to maintain its policy rate as it is eager to examine the impact of the latest rate hike against a backdrop of recent volatile financial market moves, people familiar with the matter said.
But speculation is mounting that the interest rate gap between the United States and Japan will keep shrinking down the road, possibly prompting more market participants to buy back the yen by selling the dollar, dealers said.