Yen Reaches 20-Year Low Against the US Dollar

The Japanese yen has reached its lowest value in 20 years, after trading in
New York put the currency less than one yen away from its 2002 rate of
135.15 yen to the US dollar.

On June 8, the currency briefly reached 134.47 yen against the dollar,
putting it close to the level it reached in 2002, at the end of Japan's "lost
decade" of economic stagnation, a period that followed the collapse of the
nation's 1980s economic bubble.

The currency closed at 134.26 yen to the dollar on June 8 — and some
analysts say it could even reach 140 to 150 to the dollar if things do not
improve.

In 1998, the yen reached more than 145 to the dollar during the Asian
financial crisis. That crisis began in the summer of 1997, when a number of
different currencies across Asia began to decrease in value after the
government of Thailand decided to no longer link its currency to the US
dollar.

The current decrease began in March 2022, when the Bank of Japan
decided to keep its interest rate at zero while the US Federal Reserve
introduced its first interest rate hike in more than three years to combat
rising inflation.

The US had reduced interest rates to near zero in March 2020 to encourage
businesses and individuals to spend money during the worst of the
coronavirus pandemic. But after raising rates in March 2022, the US raised
them again in May, this time by half a percentage point — the biggest hike
in over 20 years — with more increases expected throughout the year.

Meanwhile, Japanese interest rates have not moved, and the yen, after a
few weeks of relative stability, has resumed its fall.

The decline of the yen makes Japanese exports less expensive abroad and
increases the value of overseas profits. But it has also caused the cost of
imported products to increase while global energy and materials prices are
rising due to the pandemic and Russia's invasion of Ukraine. And
consumers are starting to feel the effects.

Discussion

1. What are your thoughts on the yen reaching new lows against
the US dollar?
2. When do you expect the economic impact of COVID-19 to
subside in your country?
3. What economic measures did your government introduce
when the pandemic was at its worst?
4. How low are interest rates in your country at the moment?
5. How have rising energy and materials prices impacted your
industry?
6. Do you closely follow the global markets?
7. Which of your friends or family pays the most attention to the
economy?
8. What parts of your country's economy were worst hit by
COVID-19?
9. How has your industry changed as a result of the pandemic?
10. The economy is a very sensitive organism. — Hjalmar
Schacht. What are your thoughts on this statement