Japanese yen nears 40-year low against US dollar
What's the story
The Japanese yen has plummeted sharply against the US dollar, crossing the 161 mark and nearing a four-decade low. The decline has reignited speculation that Tokyo may intervene again to stabilize its currency. After the close of Japanese stock markets on Thursday, the yen fell sharply, hitting as low as 161.8 per dollar. A drop past 161.96 against the greenback would push the yen to its lowest level since 1986.
Official response
Yen's fall prompts new warnings from Japanese finance officials
The yen's fall has prompted new warnings from Japanese finance officials. Finance Minister Satsuki Katayama said at a recent G7 meeting that Japan was "prepared to take decisive action on speculative moves" in the foreign exchange markets. The currency has remained under pressure despite over $70 billion in interventions by the finance ministry in May and a recent rate hike by the Bank of Japan.
Market analysis
Intervention attempts have largely failed to contain yen's weakness
Experts have said that intervention attempts have largely failed to contain the yen's weakness as structural factors are at play. These include high US Treasury yields, which continue to support the dollar, and the growth-focused policies of Prime Minister Sanae Takaichi's administration. Despite a weaker yen boosting Japan's exports and economic growth, concerns over imported inflation and declining domestic household purchasing power remain. Japan's annual core inflation has remained below the central bank's 2% target for four consecutive months.