The Japanese yen advanced to its highest level in more than a year against the U.S. dollar on Tuesday, while the 10-year bond yield slipped below zero for the first time as worries regarding global economy outlook sparked haven demand on refuge assets.
The yen soared to a high of 114.19 per dollar, the highest since November 2014, while currently trading around 115.40.
Investors resorted to the yen, which climbed against all major currencies, on worries that global growth is slowing down.
The Bank of Japan has surprised markets by adopting negative deposit rates, while other major central banks showed readiness to ease their monetary stance further, if needed.
On the other hand, the recent downbeat data from the U.S. raised expectations the Fed would adopt a more cautious pace of interest rate hikes this year.
Eyes will focus on Fed Chair Janet Yellen’s two-day testimony to the Congress starting today, looking for clues whether the Fed would hike rates in March.
The strength of the yen hurts exporters, where it pushed Japanese shares down by more than 5 percent on Tuesday.
“It is clear that recent moves in the market have been rough. We will continue to carefully monitor developments in the currency market.” Japanese Finance Minister Taro Aso said.
The 10-year Japan government bond yields fell to minus 0.007 percent, falling below for the first time in its history.
The five-year yield also tumbled 0.075 percentage point to a record minus 0.255 percent.
