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2h ago

Yen Holds Near 40‑Year Low as Tokyo Weighs Intervention

Widening U.S.–Japan yield gaps have encouraged heavy speculative shorting, raising expectations of further weakening unless policy paths shift.

Banknotes of Japanese yen are seen in this illustration picture taken September 22, 2022. REUTERS/Florence Lo/Illustration/File Photo
A macro close-up of US dollar and yen banknotes. Source: iStock.
Image
The yen has dropped nearly 11% against the dollar from a year ago.

Overview

  • The yen is trading around 161–162 per U.S. dollar, close to its weakest levels since 1986, and market participants remain on alert for possible yen‑buying operations by Tokyo.
  • Japanese authorities spent an estimated ¥11.7 trillion on FX intervention in April–May but those purchases failed to stop the broader slide in the currency.
  • Goldman Sachs pushed its USD/JPY forecasts to 162 in three months, 163 in six months and 165 in a year, saying a persistent U.S.–Japan interest‑rate gap and Japan’s fiscal pressures support more depreciation.
  • CFTC data show leveraged speculators holding very large net short positions on the yen, around 146,000 contracts, which amplifies carry‑trade flows and raises the risk of a sudden, disorderly unwind.
  • A weaker yen is already raising import costs and corporate strain in Japan, with Tokyo Shoko Research reporting 45 bankruptcies tied to currency weakness in the first half of the year, and a sustained trend could spill into global bond and risk markets.