Japan’s currency crashes, yen hits 20-year low

The Japanese currency, the yen, continues to lose value against the US dollar. The last time a US dollar was as expensive as it is now was 20 years ago. Why is that?

You have to pay almost 130 yen to get one US dollar for it. The speed of this descent is worrying. The yen has lost more than 10 percent against the dollar since the beginning of the year.

Japan’s central bank relies on loose monetary policy

The main reason for the crash: while the US central bank has abandoned its zero interest rate policy and is considering further interest rate hikes this year, the Japanese want to maintain their extremely loose monetary policy. This makes the dollar more attractive to investors than the yen.

The effects of this development are being felt primarily by consumers: the already high costs for importing fuel and food are continuing to rise.

Words of warning from the government

The problem has now also reached the Japanese government. So far, however, it has only reacted verbally and warns of damage to the domestic economy in an unusually clear manner.