The U.S. dollar remained strong in the upper 152 yen range Thursday morning after hitting a fresh 34-year high overnight, as higher-than-projected U.S. inflation fueled views that the Federal Reserve would keep interest rates elevated for longer than earlier anticipated.
The yen hit 153.24 in New York, its lowest level against the dollar since June 1990. The U.S. consumer price index for March increased 3.5 percent from a year earlier, reducing expectations that the Fed will start cutting interest rates as soon as June.
The yen's recent depreciation has prompted vigilance against a possible intervention by Japanese authorities, which last conducted a yen-buying, dollar-selling operation in October 2022 after the yen dropped to 151.94.
Japan's top currency diplomat warned that the government will take appropriate action to counter the yen's excessive moves without ruling out any options, but the remarks had a limited impact on the market, said Yukio Ishizuki, senior foreign exchange strategist at Daiwa Securities Co.
"With no intervention despite the yen being in the 152 range (against the dollar), we may surmise that it could depend on how quickly the currency moves (for authorities to take action,) rather than stepping in at a particular level," Ishizuki said.
The dollar has been on an upward trend in recent weeks due to a wide interest rate differential between Japan and the United States, as their central banks have been pursuing divergent ultraloose and tight monetary policies, respectively.
While the Bank of Japan recently hiked interest rates for the first time in 17 years, it has signaled it will maintain an accommodative stance for the time being.
At noon, the dollar fetched 152.80-85 yen compared with 153.14-24 yen in New York and 151.84-85 yen in Tokyo at 5 p.m. Wednesday.
The euro was quoted at $1.0745-0746 and 164.18-25 yen against $1.0736-0746 and 164.43-53 yen in New York and $1.0855-0856 and 164.83-87 yen in Tokyo late Wednesday afternoon.
Stocks were mostly in negative territory in the morning, with the Nikkei index briefly losing over 500 points as it tracked overnight losses on Wall Street.
But its downside was supported by buying of some export-oriented issues following the yen's depreciation, analysts said.
The 225-issue Nikkei Stock Average fell 198.08 points, or 0.50 percent, from Wednesday to 39,383.73. The broader Topix index was down 0.80 point, or 0.03 percent, at 2,741.99.
The yield on the benchmark 10-year Japanese government bond briefly rose 0.040 percentage point from Wednesday's close to 0.835 percent, its highest level since November 2023, as it tracked an overnight advance on U.S. Treasury yields.
