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FILE PHOTO: Japanese Yen and U.S. dollar banknotes are seen in this illustration taken March 10, 2023.
How long can Japan prop up the yen?
Japan’s currency slipped to 160 yen to the dollar on Monday, its lowest rate since 1990, triggering a government intervention and threatening Prime Minister Fumio Kishida’s position.
Voters are frustrated by Japan’s high cost of living, but a change in leadership is unlikely to alleviate the pain. The heavily populated island has few fossil fuel reserves, and it must import food and energy from abroad. That means when the yen weakens, ordinary folks see their bills shoot up.
The government employed a short-term fix: selling dollar reserves and buying yen to boost it. But Eurasia Group analyst David Boling says there’s not much to be done about the root of the problem.
“The yen’s weakness is being driven by the interest rate differential between the US, which has high interest rates and high bond yields, and Japan, which is very low,” he says. “Money is moving out of Japan to capture those higher yields.”
It might be another nail in the coffin for the PM, who could be replaced at the Liberal Democratic Party’s leadership conference this September.
“Japan has to have a lower house election by October 2025, and so the members of the LDP will be thinking about electing a leader who can take them through a national contest,” says Boling.
Former Khmer Rouge head of state Khieu Samphan is seen inside the courtroom of the Extraordinary Chambers in the Courts of Cambodia as he awaits a verdict in Phnom Penh, Cambodia.
Hard Numbers: Khmer Rouge convictions, soaring Sri Lankan inflation, Japan’s Yen-tervention, “Fat Leonard” nabbed
3: After a trial that lasted more than 15 years and cost hundreds of millions of dollars, a court in Cambodia managed to convict just 3 people in connection with the large-scale massacres that the Khmer Rouge regime carried out in the 1970s.
70.2: The inflation rate in crisis-wracked Sri Lanka has now reached a whopping 70.2%. The island nation is suffering an acute dollar shortage, which makes it hard to pay for imports of food, fuel, and medicine. In July, protesters ousted the government.
25: The Japanese central bank, which has kept its interest rates ultra low even as other major banks keep hiking theirs, intervened on Wednesday to prop up the yen for the first time in 25 years. Higher interest rates generally draw in investment, which boosts the value of a currency. The yen has lost a fifth of its value against the dollar this year.
35 million: “Fat Leonard,” a fugitive US military contractor at the center of a $35 million scandal, has been nabbed by local authorities in Venezuela. Apparently he was on his way to Russia. Washington and Caracas will now negotiate the terms of his extradition to the US.
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