The yen hits a 40-year low.

The Japanese yen has fallen to its lowest level since 1986, raising expectations that the Japanese government will soon have to intervene directly in the foreign exchange market.

ZNews•30/06/2026

The Japanese yen fell to its lowest level in 40 years. Photo: Reuters .

During trading on June 30, the Japanese yen briefly fell to 162.41 yen per US dollar , its lowest level in 40 years, before trading at its current level of 162.23 yen/USD. Japanese Finance Minister Satsuki Katayama reiterated that authorities are prepared to act at any time, but declined to make any stronger statements, according to Reuters.

The Japanese yen is on track to fall by about 2% in the second quarter, marking its fourth consecutive quarterly decline and its longest losing streak in four years, as the large interest rate differential between Japan and the US continues to put pressure on the yen.

"The question is no longer whether the Japanese Ministry of Finance will intervene to support the yen, but when they will intervene," said Carol Kong, currency strategist at Commonwealth Bank of Australia (CBA).

However, Ms. Kong believes that any intervention is unlikely to reverse the long-term upward trend of the USD/JPY pair, and predicts that the yen will fall to 164 yen/USD by early 2027.

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Over the past few months, the yen has remained largely unresponsive to interventions by the Japanese Ministry of Finance totaling approximately 11.7 trillion yen ( US$72.25 billion ), as well as interest rate hikes by the Bank of Japan (BOJ). This is due to the conflict in Iran, which has heightened inflation concerns and altered the global interest rate outlook.

Speculators have also been steadily increasing their short positions in the yen. The latest data from US regulators shows that the net value of short positions has reached $11.3 billion , near its highest level in the past two years.

Although interventions in late April and early May briefly helped the yen recover, the currency quickly came under pressure again as the market began pricing in the possibility of the US Federal Reserve (Fed) raising interest rates later this year.

This has brought all attention to the US June jobs report, to be released on Thursday, after the number of new jobs increased more than expected for the third consecutive month, reinforcing the Fed's hawkish stance. Traders are currently pricing in a 61% chance that the Fed will raise interest rates in September.

"The Japanese Ministry of Finance could intervene if it wanted to, but it understands that it is currently swimming against an increasingly hawkish Fed," said Matt Simpson, senior market analyst at StoneX.

He added that if this week's US economic data delivers a surprise favorable to those expecting Fed easing, the Japanese Ministry of Finance could immediately step in, as a weakening dollar provides further impetus. Until then, however, all that remains is likely just warnings.

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