Yen Stays Near 40-Year Low

The Japanese yen traded around 161.7 per dollar on Friday, hovering near its weakest level since 1986 despite data showing Tokyo's core inflation accelerated for the first time in eight months, reinforcing expectations that the Bank of Japan will continue raising interest rates. On Wednesday, BOJ Governor Kazuo Ueda reaffirmed his commitment to further rate hikes in line with economic, inflation, and financial developments. A day later, hawkish board member Naoki Tamura also advocated raising rates every few months. The BOJ is due to announce its next policy decision on July 31. The yen remained under pressure despite repeated verbal warnings from Japan's Finance Ministry and record currency intervention in recent weeks, as a stronger dollar and the wide interest rate differential with the US continued to weigh on the currency while the Federal Reserve is expected to raise rates later this year.

The Japanese yen traded around 161.7 per dollar on Thursday, remaining close to its weakest level since 1986 as repeated verbal intervention from officials provided little support for the currency. Earlier this week, Finance Minister Satsuki Katayama said she held talks with US Treasury Secretary Scott Bessent, reaffirming a shared commitment to coordinate in foreign exchange markets if necessary. The yen remained under pressure from a stronger dollar and the wide interest rate gap between the US and Japan. Markets have also grown skeptical about Tokyo’s willingness to conduct further currency intervention after a record-sized operation nearly two months ago significantly reduced foreign exchange reserves. Meanwhile, the Summary of Opinions from the Bank of Japan’s June meeting showed that policymakers generally favored continued rate hikes, citing underlying inflation’s progress toward the 2% target and still-accommodative financial conditions.

The Japanese yen traded around 161.5 per dollar on Tuesday, hovering near its weakest levels since 1986 as repeated verbal intervention efforts from Tokyo failed to stem the currency’s decline. Finance Minister Satsuki Katayama said she spoke by phone with US Treasury Secretary Scott Bessent, reaffirming an agreement to coordinate action in currency markets if needed. Investors remain on high alert for another round of official intervention after the yen erased all the gains recorded on April 30, when Tokyo conducted a record-sized currency-buying operation. The yen has remained under pressure despite the Bank of Japan’s recent interest rate hike, which markets view as insufficient to significantly reduce the country's interest-rate differential with other major economies. Additional weakness came from a stronger dollar, supported by hawkish signals from the Federal Reserve.