The yen’s cratering to ¥140 per dollar breaks new ground in testing Bank of Japan Gov. Haruhiko Kuroda’s defiance of a global wave of interest rate hikes and the strength of Prime Minister Fumio Kishida’s support for his stance.
The move of Japan’s currency into the ¥140 range takes it closer to the ¥146 mark that prompted joint action with the United States in 1998 to prop it up. It also sharply increases the likelihood that inflation will top 3% in Japan, way above the BOJ’s 2% target, casting further doubt on why the central bank is so insistent on sticking with rock-bottom interest rates.
As angst among households and businesses continues to rise over soaring energy and import costs, cracks may begin to emerge in the united front the government and BOJ have so far shown.