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The yen falls to its lowest level in 20 years and pressure on the euro increases

The dollar rose against the yen above 130 yen on Thursday for the first time since 2002, after the Bank of Japan maintained its commitment to ultra-loose monetary policy, while the euro briefly fell below $1.05.

There was some speculation in the market that the BoJ might pull back a bit given the increasing pressure in the foreign exchange markets, but it showed no hesitation.

“The BOJ gave the ‘permission’ to continue selling the yen,” said Lee Hardman, currency analyst at MUFG Bank in London.

The massive selling triggered by the Bank of Japan sent the dollar up against the yen to 131 yen, the highest level in 20 years.

Other Asian currencies were also pressured. The dollar reached 6.6562 yuan, against the Chinese yuan trading offshore, the highest level since November 2020.

Meanwhile, the euro fell and briefly touched a more than five-year low at $1.0481, taking its losses for the month to five percent, its worst drop since early 2015.

Expectations are now rising that the single currency is on its way to par with the dollar, a level not reached since 2002.

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