The yen dropped to 162.19 per dollar in early trading, according to LSEG data, marking a nearly four-decade low.
Japan’s Finance Minister Satsuki Katayama said the government is prepared to take decisive action against excessive currency moves, signaling readiness to stabilize the market if needed.
“That includes taking decisive action, as confirmed between Japan and the U.S.,” Katayama said.
Chief Cabinet Secretary Minoru Kihara said the government will continue working to reduce the economy’s vulnerability to foreign exchange volatility while remaining prepared to intervene in currency markets if necessary. He declined to comment on the yen’s specific level.
Analysts say the yen’s weakness is being driven largely by wide interest-rate and yield differentials between Japan and the United States, which continue to encourage carry trades that put downward pressure on the currency.
Market observers noted that although intervention is possible, its impact may be temporary.
Japan has previously intervened in currency markets, spending more than 11.7 trillion yen ($72.8 billion) in April and May to support the currency. The yen briefly strengthened during that period before resuming its decline.
The Bank of Japan has raised its benchmark interest rate to 1%, the highest in more than three decades, as part of its ongoing monetary policy normalization. The increase followed a quarter-point hike in December and reflects efforts to move away from years of ultra-loose policy.
Despite these measures, inflationary pressures and global economic conditions continue to weigh on Japan’s currency and bond markets.
Japanese government bond yields also rose, with the 40-year yield increasing to 3.779% and the 30-year yield rising to 3.914%.
