Yen Close to Weakest Level Against Dollar for Nearly 40 Years

Remaining Weak

The yen is languishing around its weakest level for almost 40 years, at almost ¥162 to the dollar. The attacks by the United States and Israel against Iran have led buyers to seek a safe haven in the dollar, causing the yen to fall below the ¥160 level.

From late April through May, the Japanese government and the Bank of Japan made a record market intervention, spending ¥11.7 trillion to push the yen back to the ¥155 range. (This was one of several currency interventions mounted in recent years, as seen in the chart below.) However, the effect was short-lived, and the yen gradually fell again, reaching ¥161.93 at one point on June 22, which was its weakest since December 1986.

Although subsequent reports that Minister of Finance Katayama Satsuki held an online meeting with US Treasury Secretary Scott Bessent led to expectations of a further intervention, upward pressure on the dollar remained strong, and nervous trading continues around the 1986 levels.

Katayama has repeatedly stated that she will take decisive action against speculative movements, but pressure for a weaker yen is rising amid expectations of an interest rate hike in the United States and that the interest rate gap between the two countries will not narrow. While intervention may be a temporary fix, it will be hard to reverse the underlying trend, with the yen expected to remain weak.

Data Sources

• Data on foreign exchange market interventions (Japanese) from the Ministry of Finance
• Data on foreign exchange markets (Japanese) from the Bank of Japan

((Translated from Japanese. Banner photo © PhotoAC.)