Japanese yen falls to 162 per dollar as policy shifts and oil price rise weigh

The Japanese yen weakened sharply, trading around 162.4 per U.S. dollar—a 38% decline and the steepest drop in four decades. The slide follows the Bank of Japan’s decision to raise its policy rate to 1%, the highest level in 28 years, as officials strive to curb a record outflow of roughly $72 billion defending the currency.

At the same time, Prime Minister Sanae Taki​chi announced a massive $2.3 trillion public‑private investment program, prompting concerns about rising inflation and Japan’s already‑high public debt, which now exceeds $9 trillion. Analysts link the yen’s fall to higher oil prices stemming from the Iran conflict, a stronger U.S. dollar amid expectations of a Federal Reserve rate hike, and divergent monetary policies between Japan and the United States.

In related market moves, the U.S. dollar lost ground to the yen and the euro ahead of the U.S. payroll report, with investors trimming positions. The yen briefly appreciated 0.9% during the European session, dropping to 161.15 yen per dollar before resuming its decline.