Yen Falls to Four-Decade Low Near ¥162 per Dollar

Overview

• The Japanese yen weakened to about ¥162 per U.S. dollar, reaching its weakest level in roughly 39–40 years and rekindling market concern over sharp depreciation.
• Investors favored dollar assets because U.S. yields are higher than Japan’s, and structural forces such as higher energy import needs and strong household investment overseas added steady demand for dollars.
• Tokyo has already used large-scale foreign-exchange tools, including a record intervention of about ¥11.73 trillion in April–May, and officials have publicly vowed they are prepared to take decisive action if moves become excessive.
• The weaker yen eases export competitiveness but raises import costs and household inflation, which could squeeze consumers and create political pressure on Prime Minister Sanae Takaichi’s government.
• Market participants expect further policy responses and some are buying yen in anticipation of intervention, but economists warn that interventions are costly and may only temporarily slow a trend driven by rate differentials and structural dollar demand.