#日元跌至40年低点 When Both Rate Hikes and Intervention Fail: The Deep Predicament of the Yen Breaking Through 162

On June 30, 2026, the yen weakened past the 162 mark against the US dollar, reaching 162.17, a nearly 40-year low since December 1986. This drop breached the 161.95 line that had prompted Japanese authorities to intervene in the market in July 2024.
What is most surprising is that the yen's depreciation is occurring against the backdrop of the Bank of Japan's continuous rate hikes. On June 16, the Bank of Japan raised its benchmark interest rate to 1%, the highest since 1995. The Japanese government also used a record 11.73 trillion yen to intervene in the foreign exchange market between late April and late May. Yet, with both rate hikes and intervention in place, the yen continues to fall without respite.
The root cause lies in the unbridgeable gap in US-Japan interest rate differentials. The US federal funds rate remains at 3.50% to 3.75%, and the market expects the Federal Reserve may raise rates three more times within the year. Meanwhile, Japan's 10-year government bond yield is only 2.64%, while the US equivalent stands at 4.451%. Such a vast differential drives global capital to persistently engage in yen carry trades—borrowing low-cost yen, converting to dollars, and investing in high-yield assets. Chen Zilei, President of the Shanghai Japanese Studies Association, stated bluntly: "This yen depreciation is occurring against the backdrop of the Bank of Japan's rate hikes, indicating that the market lacks confidence in the BOJ's current monetary policy."
The impact of the yen's depreciation presents a tale of two extremes. Export companies see soaring profits—for Toyota, each 1 yen drop in the yen boosts operating profit by 50 billion yen. However, the prices of imported energy and food surge, driving up inflation and eroding purchasing power. "All of Japan is becoming uneasy." Meanwhile, Japan's government debt as a percentage of GDP tops the list of developed countries, and rapid rate hikes will increase the fiscal burden, leaving the central bank in a dilemma of "wanting to maintain stability but unable to turn the tide."
Before the US-Japan interest rate differential loosens, the yen's current exchange rate predicament may be difficult to break. 162 might just be another waypoint.