Japanese Yen Hits 23-month Low

The Japanese Yen touched 160.80 against the USD, the lowest since July 2024. Over the past 4 weeks, US Dollar Japanese Yen gained 1.07%, and in the last 12 months, it increased 10.6%.

Japan stands ready to act if needed to address excessive exchange-rate volatility, Chief Cabinet Secretary Minoru Kihara said on Thursday. He added that the government is prepared to respond to market moves at any time, stating, "We are ready to respond appropriately to currency moves as needed at any time." He added that officials will continue to closely monitor foreign exchange developments. Kihara noted that while a weaker yen benefits manufacturers by boosting export competitiveness and corporate profits, it also raises import costs, increasing the burden on businesses and households through higher prices. "We need to scrutinise such effects comprehensively," he said, highlighting the government's balanced assessment of the currency's impact on the economy.

The Japanese yen weakened to around 160.6 per dollar on Thursday, falling to its lowest level since July 2024 and heightening speculation that authorities could once again intervene to support the currency. The yen has now erased all of the gains recorded on April 30, when Tokyo carried out a record-setting intervention to stabilize the exchange rate. The latest decline came despite the Bank of Japan’s gradual policy tightening, including a 25-basis-point rate increase to 1% earlier this week aimed at countering an energy-driven inflation shock linked to the Middle East conflict. The currency remained under pressure as the dollar strengthened after the US Federal Reserve kept interest rates unchanged while signaling growing support for rate hikes later this year. Meanwhile, President Donald Trump signed an interim agreement to end the war with Iran and reopen the Strait of Hormuz, easing concerns over Japan’s economy, which depends heavily on energy imports from the Middle East.