The Japanese yen weakened to a fresh 24-year low in the 140 zone per U.S. dollar in New York on Thursday, weighed down by growing speculation that the interest rate gap between the United States and Japan will widen.

The Japanese currency continued to slide further against the dollar after hitting its weakest level since September 1998 in the 139 zone in Tokyo.

After hovering around the 140-yen line throughout Thursday and briefly reaching 140.23 yen, the dollar was traded at 140.15-25 yen at 5 p.m. in New York. It fetched 139.28-29 yen at 5 p.m. in Tokyo and 138.91-139.01 yen in New York late Wednesday.

A financial monitor in Tokyo on Sept. 1, 2022, shows the dollar topping the 140-yen line. (Kyodo)

Investors sold the yen for the dollar after members of the U.S. Federal Reserve's policy-setting committee suggested they will keep hiking interest rates to fight inflation, creating a sharp contrast with Japan's ultraloose monetary policy. The wide gap between the U.S. and Japanese interest rates has led investors to sell the yen.

U.S. economic data released Thursday showed strong labor demand and firmness in the country's economic activities, prompting investors to believe the central bank will keep tightening its monetary policy.

Cleveland Fed President Loretta Mester said Wednesday the U.S. central bank needs to raise its benchmark rate to above 4 percent by early next year from the current 2.25-2.5 percent and keep it there for some time to fight inflation.

Mester also said she does not "anticipate the Fed cutting the Fed funds rate target next year," reiterating a hawkish stance that many Fed officials have been showing recently.


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