TOKYO, July 6 — The Japanese yen has fallen to the 162 range against the US dollar for the first time in roughly four decades, according to currency market data.
The last time the yen traded near this level was in 1986. That year, Japanese popular culture was captivated by Halley’s Comet, which made its closest approach in 76 years. It was also the year Fujifilm launched the world’s first disposable camera with a built-in lens.
The contrast between then and now is stark. In 1986, Japan was at the start of its bubble economy, a period of yen strengthening and surging global influence. Overseas observers described the country as “Japan as No. 1.”
Today, the view from abroad has shifted. The weaker yen makes nearly everything in Japan appear inexpensive to foreign visitors and investors, leading to a new label: “Cheap Japan.”
Officials and analysts point to the interest rate gap between Japan and the United States as a primary reason for the yen’s steep decline. The US central bank has maintained higher rates to combat inflation, while Japan’s central bank has kept its benchmark rate near zero, encouraging investors to sell yen and buy dollars.
The currency’s slide has drawn attention from policymakers in Tokyo. A weaker yen boosts exports and tourism but raises the cost of imported energy and food, squeezing household budgets in a country that relies heavily on foreign fuel and grain.
For regional observers, the yen’s fall carries echoes of earlier currency crises in emerging markets, though Japan’s position as the world’s third-largest economy gives this shift global weight. The account indicates that investors are testing the limits of Japan’s willingness to intervene.
Tokyo has historically stepped in to prop up the yen during periods of rapid depreciation. But the scale of the current move, and the structural factors behind it, suggest any intervention would face headwinds.
Market participants are watching for signals from Japan’s finance ministry and central bank. The coming weeks may reveal whether officials view the 162 level as a line in the sand, or whether they accept a weaker yen as the new normal in a world of divergent monetary policies.
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