The yen has fallen to its weakest against the dollar since 2008 after the Bank of Japan started its latest bout of stimulus.
The yen dropped as low as 98.85 against the dollar this morning, before rebounding slightly, on expectations that the central bank’s new moves to fight deflation will debase the currency.
Last week, the BoJ vowed to double the supply of the currency in the market in an aggressive move to help the economy reach its new 2 per cent inflation target. This involves buying assets worth trillions of yen.
Royal Bank of Scotland senior currency strategist told Bloomberg: “The yen is still trading on the back of the monetary policy decisions last week.
“We’ve come to levels which are now starting to attract some profit-taking from those who had managed to buy earlier.”
The fall has increased speculation that the yen could drop to 100 against the dollar as early as this week.
Miller Tabak chief economic strategist Andrew Wilkinson told the BBC: “This has really shaken up many people’s attitudes toward the Bank of Japan and the new government.
“It feels like it’s gathered a whole new momentum behind it, as the doubters have joined the bandwagon and it’s becoming a self-fulfilling prophecy.”
The Nikkei 225 rose as much as 3.1 per cent during Monday trading after exporters, which benefit from a weaker yen, pushed stocks higher. The index later fell back to end the session 2.8 per cent ahead.