Japan's Yen Languishes Near Multi-Decade Low Against the Dollar

The Japanese yen is languishing near its weakest level against the US dollar since 1986, keeping pressure on policymakers even after authorities deployed a record amount of intervention to slow its decline. The currency's persistent weakness reflects the wide gap between US and Japanese interest rates: while the Bank of Japan has begun cautiously raising its benchmark toward 1%, US yields have stayed elevated as the Federal Reserve signals a hawkish stance and even flags possible rate increases. That divergence continues to draw capital toward higher-yielding dollar assets, undercutting the yen despite official efforts to support it. Analysts argue that intervention can smooth volatility but cannot durably reverse the trend, and that only a narrowing of the US-Japan rate differential, through faster Bank of Japan tightening or eventual Fed easing, is likely to provide lasting support. A weak yen is a double-edged sword for Japan: it boosts exporters' overseas earnings and inbound tourism, but raises the cost of imported energy and food, feeding domestic inflation and squeezing households. The currency's trajectory remains a central concern for markets, businesses and the central bank alike.