The Japanese yen has risen to its highest value in relation to the United States dollar in one and one half years.
The yen is increasing in value on foreign exchange markets; yet Japanese finance officials have supported policies aimed at limiting its rise.
The appreciating value of the yen could hurt Japan’s efforts to increase inflation in the country. Some experts think rising prices could strengthen economic growth in the world’s third largest economy.
Employees of a foreign exchange trading company work under monitors displaying the exchange rates between the Japanese yen and the U.S. dollar. Japan’s efforts to start economic growth have caused its currency, the yen, to rise in value against the dollar.
Japan’s money has traded at about 111 yen to one U.S. dollar in recent days. The yen has also risen in value against other major currencies, including the euro.
The yen’s value has increased almost nine percent on foreign exchange markets this year. That is the biggest increase among the Group of 10 industrial countries during that period.
The group includes Belgium, Britain, Canada, France, Germany, Italy and Japan. The Netherlands, Sweden, Switzerland and the United States are also members.
The Group of 10 has agreed to cooperate on economic and monetary issues with the International Monetary Fund.
Japanese officials have said they may be willing to take additional measures to fight the rising value of the yen.
Japanese Chief Cabinet Secretary Yoshihide Suga said the government is closely watching changes in foreign exchange values.
The governor of Japan’s central bank, Haruhiko Kuroda, has repeatedly said that the Bank of Japan may cut interest rates it controls.
Demand for widely traded currencies like the yen often increases when stock prices drop. That can cause the value of such currencies to rise on international markets.
However, the Bloomberg News service reports that the currencies of commodity-exporting countries like Australia and South Africa have dropped in value. Such countries sell a large amount of agricultural products and unprocessed minerals to overseas buyers.
The Bank of Japan is seeking to raise inflation to a target rate of two percent a year. The bank has increased the amount of money available to private Japanese banks.
Japan’s Chief Cabinet Secretary Yoshihide Suga.
The Bank of Japan also has set a negative interest rate for the money commercial banks hold with it. Both moves are meant to encourage banks to lend more to businesses and individuals.
However, Japan’s rate of inflation remains near zero percent. That can be a sign of limited demand for goods and services.
The Swiss franc has also increased in value against the U.S. dollar. That increases the cost of the country’s exports and may hurt Switzerland’s economic competitiveness.
The president of Switzerland’s central bank said his bank’s policy of negative interest rates has been “indispensable” for limiting the rising value of the franc.
I’m Mario Ritter.
This story was based on reports from the Reuter news service and Bloomberg News. Mario Ritter adapted the information for VOA Learning English. George Grow was the editor.
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Words and Their Stories
encourage – v. to make someone or some group more likely to do something
indispensable – adj. extremely important, cannot do without
appreciating – adj. to increase in value
currencies – n. money that a country uses for financial transactions