Yen Prices Drop to A New 24-Year Low

On Wednesday, the dollar reached new 24-year highs against the yen, remaining above levels that prompted Japanese officials to intervene last month. At the same time, investors in sterling were left wondering what the Bank of England would do next.

The dollar gained 0.47% to 146.6 yen, lifting it to levels not seen since August 1998 after the fifth session of solid advances.

On September 22, when the dollar was trading at 145.91 yen, Japanese authorities launched their first yen-buying intervention since 1998.

The yen is particularly sensitive to the difference in long-term government bond yields between the United States and Japan. The benchmark 10-year Treasury yield is trading near 14-year highs of just under 4%, while the corresponding Japanese yield hovers around zero. Outside of Japan, yields have risen as a result of the turbulence in the British bond market.

Long-dated gilt yields rose further, with the 20-year yield reaching a 14-year high a day after Bank of England (BoE) Governor Andrew Bailey repeated that the central bank’s emergency bond-buying program would cease on Friday, instructing pension fund managers to complete their rebalancing by then.

Sterling plummeted to a two-week low of $1.0925 following Bailey’s remarks, which a bank spokeswoman echoed on Wednesday morning, but it recovered to stand 0.9% higher at $1.1062. Earlier in the day, data showed that the British economy contracted by 0.3% in August, owing to weakness in manufacturing and maintenance work in the North Sea oil and gas facilities.

In other news, the euro continued under pressure but was still on the day at $0.9709.

The risk-sensitive Australian dollar fell to a two-and-a-half-year low of $0.62395, while bitcoin, which normally moves in tandem with market sentiment, was battling around $19,000.