Yen Slides to 156-per-Dollar Range Despite 31-Year-High Rate Hike

Even though the Bank of Japan raised interest rates to their highest level in 31 years, the yen's value is falling. Raising interest rates typically strengthens a country's currency, but contrary to expectations, the yen's weakness has continued, drawing attention to the impact on Japan's economy and prices.

The benchmark rate was raised to 1.25% on the 18th, and that day the yen-dollar exchange rate in the New York market stood at 156.88 yen per dollar, up 0.91 yen from the previous day. Rate hikes are generally seen as a factor that lifts the value of a country's currency. This time, however, yen selling actually intensified immediately after the decision. As the yen weakened further in the market, the yen-dollar rate briefly rose to the 158-yen range per dollar.

As the yen plunged, the Japanese government and the Bank of Japan conducted rate checks with several financial institutions at around midnight on the 19th (Tokyo time). After the news, the yen-dollar rate fell back to the 156-yen range.

The weak yen's effects are also being felt in the domestic foreign exchange market. On the morning of the 20th, a tourist exchanged yen at a money exchange in Myeongdong, Jung-gu, Seoul.