TEMPO.CO, Jakarta - The Japanese yen traded below the 163 range against the US dollar in Tokyo on Wednesday morning, July 22, a level unseen since December 1986.
At 9:00 a.m. local time, the US dollar was trading in the range of 163.18-20 yen, compared with 163.13-23 yen in New York.
Dollar-buying occurred as investors sought the US currency as a safe haven amid rising tensions in the Middle East.
The weaker yen triggered price hikes of imported goods in Japan, from energy to food, dealing a blow to the resource-poor country and Japanese households.
Citing The Straits Times, Japanese authorities are gearing up to take action in the currency market in response to the yen's continued weakening.
“The situation involving the US and Iran has taken a sudden turn for the worse—a deterioration that the world did not foresee—creating a very difficult environment,” said Finance Minister Satsuki Katayama on Wednesday.
“Our policy remains completely unchanged: We will take appropriate and bold action at any time, should the need arise," Katayama added.
Tokyo has spent 11.73 trillion yen to intervene between April and May, yet the currency remains at its weakest level amid concerns over fiscal expansion and the US Federal Reserve's move to raise benchmark rates.
According to senior foreign-exchange strategist at National Australia Bank, Rodrigo Catril, the Japanese yen is looking to head toward 165 if the US-Iran war worsens.
Read: Japan, US Announce Close Coordination to Stabilize Yen
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