Overview
- The yen weakened to about ¥162 per U.S. dollar in late June, its weakest level since 1986, renewing talk that Japan may step into foreign‑exchange markets again.
- Tokyo spent a record roughly ¥11.7 trillion buying yen between late April and May, but officials say that intervention only provided short‑term relief.
- The Bank of Japan raised its policy rate to about 1.0% in mid‑June, but the remaining gap with higher U.S. rates has encouraged traders to borrow in yen and invest abroad, a practice known as the carry trade.
- A weaker yen helps exporters and lifts stock markets but raises import costs for energy and food, squeezing households and complicating government policy choices.
- Traders have rebuilt large short positions in the yen, so markets are watching U.S. jobs data and Fed signals for the next catalyst and analysts say a lasting reversal likely needs a drop in U.S. rates or coordinated international action.