Despite the US Federal Reserve raising interest rates, the Japanese yen is still on a downward trend against the US dollar. This is because the Bank of Japan has been adamant about its ultra-loose monetary policy, a contrast to the more aggressive Fed.

The Japanese yen fell to a fresh 24-year low against the dollar on Tuesday. This is the latest reversal of a trend that started in March when the yen reached a record high of 115 per dollar. The dollar slid below this level for the first time since May, but it did not drop below 140 per dollar overnight in New York.

The Bank of Japan has been keeping interest rates at their record lows for nearly a decade, a stark contrast to the Federal Reserve. The Federal Reserve has raised interest rates in order to tackle inflation, which is high enough to make imports and food more expensive. In contrast, the Japanese central bank has not changed its monetary policy since it began its so-called Abenomics policy.

The Bank of Japan stepped in and intervened in the global currency market last month, the first time since 1998. The Bank of Japan purchased yen to support the weakening currency. The yen plunged to a fresh 24-year low against the US dollar on Tuesday, but it is not expected to fall below 140 per dollar in the near future.

The US Federal Reserve and other central banks around the world have aggressively tightened monetary policy in recent months. These actions have helped the dollar gain ground against other major currencies. The Federal Reserve has raised interest rates five times in March and May, and officials are expected to hike rates by another 75 basis points at their upcoming meeting in June. This is the fourth rate increase in the last year, despite the fact that inflation in the US remains hot.

The Japanese economy is still struggling with demographics, and the Bank of Japan has had a tough time supporting economic growth. There is a shortage of labour, and many Japanese companies outsource their manufacturing to China. The Japanese economy has been impacted by the Fukushima nuclear accident, which cut the nuclear share of power generation from 25% to 7% in 2011. Despite the yen’s recent decline, the Bank of Japan has maintained its monetary stimulus policies, sticking with its ultra-loose monetary policy.

The yen’s decline is likely to continue, but the Bank of Japan will continue to support the currency as it battles inflation. Rather than hike interest rates, the BOJ is likely to keep buying yen, but analysts say this will have little impact when Japan’s interest rates remain lower than those in the US.

In Japan, the Consumer Price Index (CPI) rose by 0.6% in October, which is a little lower than expected. In October, the CPI remained at 100, the same level it had been at for over two decades. However, the reading was slightly below the expected figure, which is also the result of an upward revision in previous months.