By Alun John and Ankur Banerjee LONDON/SINGAPORE, June 30 The steadily climbing dollar pushed the yen down to levels not seen since 1986 on Tuesday, stoking worries that direct intervention from Tokyo was near, if perhaps not immediate, and also putting the euro under pressure.
The greenback climbed to as high as 162.41 yen for the first time in 40 years on Tuesday and was last at 162.15, up slightly on the day
Japanese Finance Minister Satsuki Katayama reiterated that authorities stood ready to respond appropriately at any time, but refrained from stronger rhetoric. “The dollar is the main story at the moment and dollar/yen the key focus within that,” said Lee Hardman, senior currency analyst at MUFG. “The market has moved to price in a higher chance of the Federal Reserve hiking rates, and while our view is ultimately the Fed can look through this inflation pick up there isn’t an immediate trigger for that unless we get softer data or Fed officials dial back the rhetoric.” U.S. inflation is running well above target, the economy is growing and at this month’s Federal Reserve meeting policymakers’ new quarterly projections showed nine of 19 now anticipate a rate hike by year-end. Thursday’s U.S. jobs data will be closely watched. The dollar index, which measures the U.S. currency against six other units, clawed back some of its overnight losses to be last at 101.32, set for a 1.4% rise in the quarter after gaining 1.6% in the first three months of 2026.
YEN’S FIGHT AGAINST THE TIDE The dollar’s strength has been most visible on the Japanese yen. Even with the Bank of Japan’s latest rate hike, rates remain far below those in the United States, leaving a wide yield gap that favours the dollar and sustains carry trades, in which investors borrow cheaply in yen and invest in higher-yielding currencies. The Japanese currency was set for a 2% drop in the second quarter, its fourth straight quarter of decline, its longest such streak in four years as a wide…