The Japanese yen has fallen past 162 yen to the US dollar as of June 2026, marking its weakest level since 1986. The currency experienced a 3.6% decline in 2026 through mid-June and a nearly 11% drop from mid-2025 to mid-2026.

This depreciation occurred while the Bank of Japan raised its benchmark interest rate to 1% by June 2026, having ended its negative interest-rate policy in 2024. In contrast, the US Federal Reserve maintained its policy rate at approximately 3.5%-3.75% in mid-2026. Tokyo intervened in currency markets in April and May 2026, spending tens of billions of dollars.

Japan's real effective exchange rate (REER) has reached its lowest point in over 50 years. Robin Brooks, a senior fellow at the Brookings Institution, stated, "That puts depreciation pressure on the yen, since investors have little incentive to stay in Japan." Brooks added, "In fact, it's my view that FX intervention is deeply counterproductive because it creates the illusion that nothing's wrong when—actually—there's a very serious crisis brewing." He also said, "There'll come a point when markets will just ignore intervention."

Japan's government debt is nearing 240% of its Gross Domestic Product. Global crude oil prices surpassed US$100 per barrel during the war involving the US, Israel, and Iran, impacting Japan, which imports approximately 95% of its crude oil from Gulf producers. A sharp rise in weak-yen-related bankruptcies occurred in Japan during the first half of 2026.

Chris Turner, global head of markets research at ING, said, "The Japanese probably realize that FX intervention at the moment is an exercise in futility." He added, "But they don't want to leave yen losses unchecked in case it triggers a 'sell Japan' mindset should Japanese government bonds and then equities come under pressure, too." The yen reached a peak of approximately 80 yen per dollar in 1995. In other regional markets, the Singapore dollar, Malaysian ringgit, Vietnamese dong, and Indonesian rupiah strengthened against the yen.