The Japanese yen just hit a level it hasn’t seen since Ronald Reagan was in office and Top Gun was dominating the box office. Trading around ¥161.93-161.96 per US dollar in late June 2026, Japan’s currency has fallen to its weakest point since December 1986.
A 250-basis-point gap is doing the heavy lifting
The core problem is straightforward. The Bank of Japan’s policy rate sits at roughly 1%, while the Federal Reserve’s rate hovers near 3.5%. That gap, roughly 250 basis points, creates an irresistible gravitational pull that drags the yen lower.
Japan hasn’t been sitting idle. Between late April and May 2026, the country deployed a record ¥11.7 trillion, roughly $72.5 billion, in currency intervention to prop up the yen. The intervention managed to halt the slide near ¥155 per dollar. Then the yen resumed its descent anyway, blowing past that level and settling near ¥162.
The carry trade is back, and it’s bringing friends
