Japanese yen sinks to weakest level since 1986, keeping intervention risks in focus
Authorities signaled readiness for bold action after the yen fell to 161.97 per dollar, its weakest level since 1986, despite a recent Bank of Japan rate hike.
- On Monday, the Japanese yen slid to approximately 161.97 per dollar, its weakest level since 1986, while Finance Minister Satsuki Katayama reiterated authorities remain ready to take "bold action" to curb speculative moves.
- Divergent monetary policies drive the depreciation; the U.S. Federal Reserve maintained a hawkish stance while the Bank of Japan's recent 25 basis point rate hike to 1.00% failed to narrow the interest-rate differential.
- Japan spent a record ¥11.73 trillion, or about US$72.5 billion, between April 28 and May 27 to support the currency, though analysts note such intervention serves only as a "temporary fix" without addressing fundamental rate gaps.
- The currency's weakness boosts exporter profits while swelling import costs, threatening the popularity of Prime Minister Sanae Takaichi's government as consumers face higher food and energy prices.
- Thursday's U.S. jobs report for June looms as the week's defining event, with analysts suggesting the data will determine if markets continue building on hawkish Fed repricing or begin to unwind positions.
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