The dollar hits a 20-year high against the yen
Add Axios as your preferred source to
see more of our stories on Google.


The greenback soared on Thursday. It will now buy more than 130 yen — a level not seen since mid-2002 — in an illustration of the dollar's growing muscle.
Driving the news: The surge against the yen came after the Bank of Japan stuck to plans to keep interest rates low, despite an increasingly inflationary global backdrop.
Yes, but: Japan, with its decadeslong battle with deflation and rapidly aging demographics, has seen much more muted price increases than the rest of the world.
- In fact, its latest inflation report showed just a 1.2% rise in annual inflation, still far below the Bank of Japan's elusive goal of 2%.
How it works: Currency values are sensitive to the discrepancies between the central bank interest rate moves in different countries. All else equal, if a central bank is boosting rates — as the Fed is — those higher rates attract capital from countries like Japan where interest rates look likely to stay low.
- Those dynamics have pushed the dollar up and the yen down sharply in recent months.
The intrigue: The Bank of Japan seems to believe the weak yen will be a boon to the country's powerful export sector.
- But with fuel costs soaring — Japan is a massive energy importer — it also can be costly for consumers and politically sensitive. And if supply chain snarls are hampering exports, a weak yen won't do much to set off a boom in sales.
What we're watching: Japanese export data, which has been on a roll recently, though not enough to offset the surging cost of energy imports.
