The yen touched 120 per dollar on Thursday in New York for the first time since July 2007 as policymakers' decisions to expand monetary stimulus and delay a consumption tax hike highlight the risks the economy is deteriorating.
The yen has plunged 9 percent since the Bank of Japan on Oct. 31 increased the annual target for expanding the monetary base to ¥80 trillion, and Prime Minister Shinzo Abe delayed a second bump to the sales levy by 18 months, after the first in April sent the economy into recession. Abe is forecast to score a second landslide victory in a Dec. 14 election.
"It's still the divergent-growth, divergent-policy story," said Robert Sinche, a global strategist at Amherst Pierpont Securities LLC in Stamford, Connecticut. "We are seeing capital flows out of Japan, and I think that helps bring capital out and continues this movement down in the yen."