Yen hits 39-year low of 162 against dollar

The Japanese yen tumbled to a nearly 39-year low against the US dollar on Monday, as expectations that US interest rates could stay elevated continued to pressure the currency. The dollar briefly rose to 162.29 yen, marking the weakest level for the Japanese currency since December 1986.

Interest rate gap and intervention risk

The latest decline came as the interest rate gap between the US and Japan weighed heavily on the yen. Although the Bank of Japan raised its policy rate earlier this month to 1.00% — its highest level in 31 years — the gap with US rates remains substantial. The Federal Reserve has signalled that another rate increase could come before year-end, despite pressure from President Trump for lower rates. Investors remain cautious over possible intervention by Japanese authorities, with the currency having previously approached a key threshold of 161.96 per dollar in July 2024, a level that triggered intervention.

Economic impact and official warnings

A weaker yen increases import costs for Japan, particularly for energy and food, adding pressure on households and businesses in the resource-poor country. Japan has intervened in currency markets several times to slow the yen’s depreciation, most recently from late April into May. Japanese officials have warned that they could act again if sharp currency moves continue. For Türkiye, which has itself faced currency volatility and inflation pressures, the yen’s slide highlights the broader impact of divergent monetary policies on global exchange rates and trade competitiveness.