Japanese Yen Hits 40-Year Low Against US Dollar
By Aboki Forex —
The Japanese yen dropped to its lowest level against the U.S. dollar since 1986 on Monday. It fell 0.1 percent to 161.96 per dollar. The currency broke past the 161.95 level last reached in July 2024. At that time, Japanese authorities intervened to support the exchange rate.
The yen's decline continues despite recent efforts by Japan's central bank to tighten monetary policy. The Bank of Japan raised its benchmark interest rate to 1 percent on June 16. That is the highest level since 1995. The move had little effect on the currency's trajectory. Traders expect the Federal Reserve will maintain a hawkish stance.
Japanese Finance Minister Satsuki Katayama stated on June 19 that authorities remain prepared to take bold action against excessive speculative moves in the foreign exchange market. Katayama said the U.S. and Japan are increasingly aligned on foreign exchange policy. This followed her meeting with U.S. Treasury Secretary Scott Bessent. Both countries agreed to take bold steps on currencies if necessary.
Japan previously spent a record 11.73 trillion yen, or $72.5 billion, intervening in currency markets between April 28 and May 27. That happened after the yen first dropped past 160 per dollar. The government likely used its holdings of foreign securities, including U.S. Treasuries, to finance the currency defense. This is according to Finance Ministry reserve data.
The weak yen is increasing profits for Japanese exporters. It is also supporting the nation's stock market. But import costs are rising for oil and gas shipments priced in dollars. This is leading to higher consumer prices for food and electricity. The Japanese government plans to call for appropriate monetary management in its basic policy guidelines. Market participants view this as an attempt to discourage the Bank of Japan from additional interest rate increases.