Yen hits 40-year low at 161.98 per dollar

The yen fell to its lowest level in roughly 40 years in New York foreign exchange trading on June 29 (local time).

The yen slid to 161.98 per dollar, breaching the psychologically significant floor of 161.96 — the trough reached in July 2024 — according to Japan's Nikkei newspaper and NHK. The move marks the weakest level for the Japanese currency since December 1986, roughly 39 and a half years ago, shortly after the Plaza Accord.

Japanese media attributed the yen's decline to growing market expectations that the Federal Reserve could raise interest rates before the end of the year, amid rising prices tied to Middle East tensions and a continuing recovery in employment. Uncertainty over the pace of future Bank of Japan rate hikes added to the pressure, with analysts noting that a widening interest rate gap between the United States and Japan drove the yen-dollar exchange rate even lower.

In December 1986, the yen-dollar rate fluctuated between 158 and 163 per dollar before the Plaza Accord triggered a sharp yen appreciation that persisted for years. The Nikkei noted that if the yen weakens to those levels, there is no reliable chart reference to indicate how far it could fall — entering what it described as uncharted territory.

As the yen approaches historically weak levels, concern is growing that the Japanese government and the Bank of Japan may step in to support the currency by buying yen.

Meanwhile, when the yen fell to 161.93 per dollar in New York on June 22, Japanese Finance Minister Katayama Satsuki and US Treasury Secretary Scott Bessent held online consultations to discuss foreign exchange market developments.