Sharjah24 – AFP: The yen hit its lowest level against the dollar in two decades on Wednesday, extending recent falls as the gap widens between Japan's ultra-loose monetary policy and Fed tightening.

Despite being traditionally considered a safe-haven currency, uncertainty fuelled by Russia's war in Ukraine has not caused the yen to strengthen.

Instead, moves by the US Federal Reserve towards a more aggressive policy and the shock of rising oil prices in Japan -- a major importer of fossil fuels -- have pushed the currency lower, analysts say.

One dollar bought 126 yen at around 0630 GMT on Wednesday, the lowest rate since 2002.

"The Japanese yen has been one of the weakest currencies anywhere in the world this year," Dutch banking group ING said in a recent commentary.

The yen had already lost 10 percent of its value against the dollar in 2021 after four years of steady strengthening.

The US central bank has taken a hawkish tone as it embarks on an aggressive tightening path, pushing up American treasury yields which have strengthened the dollar against the yen.

Earlier on Wednesday, Bank of Japan governor Haruhiko Kuroda said the bank would maintain its monetary easing policies in a bid to reach its long-held two-percent inflation target.

Swiss Bank UBS said a weaker yen would likely hit Japanese households' purchasing power and domestic-oriented small businesses who will face higher import costs.