Japanese yen hits 40‑year low as authorities signal intervention

The Japanese yen fell to a 40‑year low of about 162 per U.S. dollar, prompting markets and policymakers to focus on possible currency intervention. Finance Minister Satsuki Katayama said the government is ready to act at any time and has been in close contact with U.S. authorities. Treasury yields on Japanese government bonds rose to near‑30‑year highs, adding pressure on fiscal stability.

The Bank of Japan (BOJ) is under growing pressure to raise rates. A government panel member said the BOJ should lift its policy rate from 1 % to around 1.5 % with two more moderate hikes, while markets price in a better than 60 % chance of an earlier hike by October. The BOJ has already raised rates to 1 % in June, its first increase since the 1990s.

Japanese officials have shifted strategy, abandoning prior advance warnings of intervention and moving to a more surprise‑based approach to deter speculators. Between April and May, the Ministry of Finance spent roughly ¥11.7 trillion (about $73 billion) on foreign‑exchange operations, but the yen’s decline persisted.

Analysts note that the wide interest‑rate gap with the U.S. Fed, which is holding rates around 3.5‑3.75 %, fuels capital outflows from yen‑denominated assets, raising import costs and inflation risks in Japan.