Japanese yen slides to 40-year low versus US dollar

The Japanese yen fell to its weakest level in four decades, dropping to about ¥162.27 per US dollar – the lowest since 1986. The decline was driven by a strong dollar backed by expectations of higher US interest rates, widening interest‑rate differentials, and higher oil prices after the Israel‑Iran conflict, which increase demand for dollars and fuel inflation in Japan.

Analysts note that despite the Bank of Japan’s recent hike of its policy rate to 1% – the highest in three decades – the move has not halted the yen’s slide. The government has signaled readiness to intervene in the foreign‑exchange market, recalling past interventions that spent over ¥11.7 trillion (about $73 billion) in April‑May. However, experts caution that any intervention is unlikely to reverse the longer‑term weakening trend caused by structural factors such as Japan’s high public debt and persistent low domestic rates.