The yen is sliding faster against the euro than the dollar as speculation grows that the European Central Bank will take it slow in cutting interest rates because inflation remains elevated.
The Japanese currency has weakened 1.5% against the euro this month and is approaching its previous record low of ¥171.56 reached on April 29. While the Bank of Japan (BOJ) ended the world’s last negative interest rate policy in March, its rate gap with overseas counterparts, including the ECB, remains wide.
There has been some disagreement on the pace of likely moves among ECB members that has fueled investor expectations that changes will be gradual. Meanwhile, the U.K. pound climbed to the highest level against the yen since 2008 on the view that the Bank of England will also take its time due to lingering inflation.