Skip to Content News Archives Economy Energy Oil & Gas Renewables Electric Vehicles Mining Commodities Agriculture Real Estate Mortgages Mortgage Rates Finance Banking Insurance Fintech Cryptocurrency Work Wealth Smart Money Wealth Management Investor Personal Finance Family Finance Retirement Taxes High Net Worth FP Comment Executive Women Puzzmo Newsletters Financial Times Business Essentials More Innovation Information Technology FP500 Podcasts Small Business Lives Told Tails Told Shopping Financial Post Store Obituaries Place a Notice Advertising Advertising With Us Advertising Solutions Postmedia Ad Manager Sponsorship Requests Classifieds Place a Classifieds ad Working Profile Settings My Subscriptions Saved Articles My Offers Newsletters Customer Service FAQ News Economy Energy Mining Real Estate Finance Work Wealth Investor FP Comment Executive Women Puzzmo Newsletters Financial Times Business Essentials HomeNewsEconomyYen hits 40-year low in historic slide that’s rattled JapanStructural issues such as the aging and shrinking population have clouded Japan's prospects for economic growthAuthor of the article: You can save this article by registering for free here. Or sign-in if you have an account.The yen’s slump has continued in the face of regime change at the Bank of Japan, which ended a negative-interest rate policy in 2024, a change that had raised expectations for a revival in the currency. Photo by Kazuhiro NOGI/AFP via Getty ImagesThe yen slid to its weakest level against the dollar since 1986, a milestone that will generate unease in Japan and put traders on high alert for authorities wading into the market.Subscribe now to read the latest news in your city and across Canada.Exclusive articles from Barbara Shecter, Joe O'Connor, Gabriel Friedman, and others.Daily content from Financial Times, the world's leading global business publication.Unlimited online access to read articles from Financial Post, National Post and 15 news sites across Canada with one account.National Post ePaper, an electronic replica of the print edition to view on any device, share and comment on.Daily puzzles, including the New York Times Crossword.Subscribe now to read the latest news in your city and across Canada.Exclusive articles from Barbara Shecter, Joe O'Connor, Gabriel Friedman and others.Daily content from Financial Times, the world's leading global business publication.Unlimited online access to read articles from Financial Post, National Post and 15 news sites across Canada with one account.National Post ePaper, an electronic replica of the print edition to view on any device, share and comment on.Daily puzzles, including the New York Times Crossword.Create an account or sign in to continue with your reading experience.Access articles from across Canada with one account.Share your thoughts and join the conversation in the comments.Enjoy additional articles per month.Get email updates from your favourite authors.Create an account or sign in to continue with your reading experience.Access articles from across Canada with one accountShare your thoughts and join the conversation in the commentsEnjoy additional articles per monthGet email updates from your favourite authorsSign In or Create an AccountorThe currency depreciated as much as 0.2 per cent to touch 161.98 versus the greenback in New York trading on Monday, breaching the 161.95 mark touched in July 2024 during an earlier campaign by Japan to shore up the exchange rate.The last time the yen traded at this level it was barrelling in the opposite direction, midway through a massive and years-long rally that followed a currency accord engineered by the United States. The world was a different place — Japan’s asset bubble was still forming, the Soviet Union was cleaning up after the Chernobyl nuclear disaster and Top Gun had just launched Tom Cruise toward the pinnacle of Hollywood stardom.SUBSCRIBER EXCLUSIVE: FP West: Energy Insider brings you behind the oilpatch’s closed doors with exclusive insights from insiders every Wednesday morning.By signing up you consent to receive the above newsletter from Postmedia Network Inc.A welcome email is on its way. If you don't see it, please check your junk folder.The next issue of FP West: Energy Insider will soon be in your inbox.We encountered an issue signing you up. Please try againThis time, the yen is sliding, and Japan is on its way out of an economic funk that lasted for a generation. The currency weakness is boosting the profits of exporters, and in turn helping the nation’s stock market to record highs.But import costs are swelling, notably for oil and gas shipments priced in dollars. The ensuing inflation is hurting consumers, who are paying more for everything from food to electricity, and threatening to undermine the popularity of Prime Minister Sanae Takaichi’s government.The yen’s slump has continued in the face of regime change at the Bank of Japan, which ended a negative-interest rate policy in 2024 — a change that had raised expectations for a revival in the currency.“Intervention is right around the corner if we don’t see a quick correction,” said Andrew Hazlett, a foreign-exchange trader at Monex Inc. Still, intervention is “only a temporary fix if they do not address the interest-rate differential.” Japanese banknotes arranged in Kyoto, Japan, on Tuesday, Jan. 27, 2026. Photographer: Kentaro Takahashi/BloombergThe BOJ lifted its benchmark interest rate on June 16 to one per cent, the highest since 1995. Yet the impact was minimal, as traders expect the Federal Reserve to stay hawkish going forward. The Japanese government is also expected to call for “appropriate” monetary management in its basic policy guidelines, in an apparent bid to dissuade the central bank from further interest rate hikes.The persistent softness of the yen also came in the face of a record ¥11.73 trillion (US$72.5 billion) intervention by the government from April 28 to May 27 after it first slid past 160 per dollar. That bout of purchasing likely saw Japan draw on its holdings of foreign securities, including U.S. Treasuries, to finance the currency defence, according to Finance Ministry reserve data.“Doubtless, the Bank of Japan is watching things closely,” Shaun Osborne, Scotiabank’s head of currency strategy, said after the yen crept past the key level on Monday.The huge amount spent underscores not only how much is at stake for Japan, but also the difficulty involved in pushing back against the tide in the US$9.5 trillion-a-day global foreign exchange market.Japanese Finance Minister Satsuki Katayama reiterated on June 19 that authorities were ready to take “bold action” to damp excessive speculative moves in the foreign exchange market. Katayama also said that the U.S. and Japan are increasingly “aligned” on foreign exchange policy after her meeting with U.S. Treasury Secretary Scott Bessent, and that they agreed to take “bold steps” on currencies if needed.Bouts of intervention in 2022, when Japan came in to support the yen for the first time since 1998, and again in 2024, helped bring temporary relief before the currency resumed its depreciation trend. In the most recent case that started on April 30, authorities entered the market several times to defend the currency.Analysts differ on the reasons for the yen’s long decline, and if or how it can be halted. Interest-rate differentials, both current and projected, are often cited as the main cause, with persistently low domestic levels prompting investors to sell the yen and buy foreign assets.Structural issues such as the aging and shrinking population have clouded prospects for economic growth and fuelled a ballooning pile of public debt that many see as weighing on prospects for substantial rate hikes.“Absent official action, there’s no reason for the yen to arrest its structural decline. Japan needs to step in again or the US real rates picture needs to change materially, which could happen with the data on tap this week. Otherwise, this is a market clearly keen on testing pain points.”— Brendan Fagan, Macro Strategist, Markets Live—With assistance from John Cheng. Join the Conversation This website uses cookies to personalize your content (including ads), and allows us to analyze our traffic. Read more about cookies here. 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