The Japanese yen falls to its lowest level against the dollar since 1986, driven by policy divergence and intervention concerns.
The USD/JPY pair breached the 162.00 mark during Tuesday’s Asian session, reaching its highest level in four decades. The move reflects persistent strength in the US dollar amid expectations of Federal Reserve rate hikes, while Japan’s low borrowing costs sustain the yen’s weakness.
Japan’s policymakers have signaled potential intervention, with officials warning of appropriate action against excessive currency moves. The Bank of Japan’s hawkish stance, including discussions of faster rate hikes, has not yet offset the yen’s decline. Meanwhile, mixed US-Iran diplomatic signals and a pause in the dollar’s pullback support the pair’s rally.
Traders remain cautious, balancing the BoJ’s inflation concerns against the carry trade’s continued appeal. The yen’s slide underscores the widening policy gap between the Fed and BoJ.