Yen Falls Below 163 per Dollar... Lowest Level in 39 Years and 7 Months

Japanese Finance Minister: "We will take resolute action if necessary"
Market remains skeptical about intervention's effectiveness

Yonhap News Agency

On July 22, the Japanese yen fell to its lowest level in about 40 years. The Japanese government hinted at the possibility of intervening in the foreign exchange market, but the market reaction remained limited.

According to the Nihon Keizai Shimbun (Nikkei), in the New York foreign exchange market the previous day, the yen-dollar exchange rate surpassed 163 yen per dollar. On this day, the rate continued to fluctuate in the 163 yen range in the Tokyo foreign exchange market as well. It was the first time since December 1986 that the yen has fallen to the 163 yen per dollar range, marking the lowest level in about 39 years and 7 months.

The yen’s weakness is attributed to the Japanese government’s announcement the previous day of the ‘Honebuto Policy,’ which outlines the basic direction for economic and fiscal management, in which the government emphasized an expansionary fiscal stance. The traditional expression of 'fiscal soundness' was replaced with 'fiscal sustainability,' leading to widespread expectations that the government will shift toward more active fiscal policy. In addition, geopolitical instability in the Middle East has led to increased demand for the US dollar as a safe asset, further accelerating the yen’s depreciation.

Some analysts explained that, reflecting both the possibility of Japanese government intervention in the foreign exchange market and expectations that the Government Pension Investment Fund (GPIF) will increase investment in domestic assets, investors who had bought yen began realizing profits, which increased selling pressure.

In response, Japanese Finance Minister Satsuki Katayama said on this day, "If necessary, we will take appropriate and resolute measures at any time," implying the possibility of currency market intervention. However, she maintained the government’s previous stance, saying, "I will not comment on specific exchange rate levels."

Nevertheless, despite the authorities’ warning, the market did not show a strong reaction. It is widely believed that intervention alone will not be enough to reverse the yen’s weakness.

This content was produced with the assistance of AI translation services.