The U.S. dollar remained solid around the 153 yen line Thursday in Tokyo after hitting a new 34-year high overnight, as higher-than-expected U.S. inflation reduced expectations the Federal Reserve will start cutting interest rates as soon as June.
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, fueling views that the Fed is likely to keep interest rates elevated longer than earlier expected.
But the yen's recent depreciation could see a possible intervention by Japanese authorities, which last conducted a yen-buying, dollar-selling operation in October 2022 after the Japanese currency dropped to 151.94.
"The dollar is likely to continue rising without a currency intervention, with the 155 yen range coming into sight," said Yukio Ishizuki, senior foreign exchange strategist at Daiwa Securities Co.
Ishizuki said the market reacted minimally to a warning by Japan's top currency diplomat that the government will take appropriate action to counter the yen's excessive moves.
The Japanese currency has been sold in recent weeks due to the wide interest rate differential between Japan and the United States, with their central banks pursuing divergent ultraloose and tight monetary policies, respectively.
The Bank of Japan recently hiked interest rates for the first time in 17 years, but has signaled it will maintain an accommodative stance for the time being.
Meanwhile, the U.S. central bank has kept the benchmark interest rate at a 23-year high to fight persistent inflation in the world's largest economy.
At 3 p.m., the dollar fetched 152.97-98 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 $1.0742-0744 and 164.32-36 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 trimmed earlier losses and ended mixed as technology issues dropped after overnight declines on their U.S. counterparts, while the yen's weakness supported export-oriented issues.
The 225-issue Nikkei Stock Average ended down 139.18 points, or 0.35 percent, from Wednesday at 39,442.63. The broader Topix index finished 4.17 points, or 0.15 percent, higher at 2,746.96.
On the top-tier Prime Market, decliners were led by real estate and precision instrument issues, while miners, and oil and coal product issues led gainers.
"Some exporters were sought on hopes for an upward revision in profits following the yen's depreciation," Maki Sawada, a strategist in the Investment Content Department of Nomura Securities Co.
Market participants shifted their focus to the earnings results for Nikkei heavyweight Fast Retailing, operator of the Uniqlo clothing chain, set to be released after the market closed, she said.
Meanwhile, the yield on the benchmark 10-year Japanese government bond briefly climbed 0.060 percentage point from Wednesday's close to 0.855 percent, its highest level since November 2023, tracking an advance on U.S. Treasury yields.
