Japanese Yen Hits 6-week High

The Japanese yen surged past 160 per dollar on Thursday from the 40-year low of 164 in the prior session amid the likely intervention by the Ministry of Finance. The probable move followed the $74.2 billion in selling by the MoF on the month to May 27th. This brought relief to recent pressure from high energy prices, fiscal concerns, and wide interest rate differentials. Soaring LNG and petrol prices due to the war in Iran raised dollar bids in Japan by energy importers and pressured growth due to lower margins, pressuring the domestic currency. In the meantime, fiscal concerns were magnified by the domestic tax panel reiterating the proposal to cut food taxes to 1% from the current 8%, adding to the supply of yen through fresh debt. Lastly, the Bank of Japan is due to hold rates unchanged tomorrow following their hike in June. The BoJ is expected to still deliver hikes this year, but the expectation of hikes by the US Fed limited any narrowing in the rate differential.

The Japanese Yen touched 160.42 against the USD, the highest since June 2026. Over the past 4 weeks, US Dollar Japanese Yen lost 1.19%, and in the last 12 months, it increased 6.52%.

The Japanese yen traded around 163.5 per dollar on Thursday after rebounding in the previous session, supported by broad dollar weakness following the Federal Reserve’s decision to leave interest rates unchanged. However, three FOMC members dissented in favor of a rate hike, while Chair Kevin Warsh emphasized that the decision to keep rates steady should not be viewed as a sign of policy inertia, adding that markets would continue to respond to incoming economic data. Meanwhile, the Bank of Japan is widely expected to leave interest rates unchanged on Friday while signaling that additional rate hikes remain possible to help curb the yen’s weakness. Verbal intervention from Japanese authorities has so far done little to support the currency, while the BOJ has remained vague about the timing of further policy tightening. On the geopolitical front, the US was reportedly carrying out fresh air strikes on Iran following attacks on American forces in the region.