The yen weakened past 162 against the dollar on 30 Jun, its lowest level since December 1986. Traders bet that the Bank of Japan (BOJ) will move cautiously on further rate hikes while the US Federal Reserve leans hawkish under new Chair Kevin Warsh.
Yen Slides past 162 to 39-Year Low, Reviving Carry Trade Questions
30 June 2026 - 06:06 CEST
By Oihyun Kim
Intervention warning loses bite
Finance Minister Satsuki Katayama told reporters that Japan stands "ready to take appropriate action whenever necessary," but described her own communication as "stable" and only referred to "bold action" when prompted. The restrained tone contrasted with the days leading up to Japan's late-April intervention, when officials issued what they called a "final warning" to markets.
The BOJ's policy rate sits at 1.0%, well below the Fed's 3.5%–3.75% and the European Central Bank's 2.25%, according to statements from the BOJ, the Fed, and the ECB. Prime Minister Sanae Takaichi's preference for accommodative conditions has reinforced expectations that the gap will narrow only gradually.
Reports that reflationist candidates – who favour looser monetary policy to lift inflation – are being considered for the BOJ board have added to that view.
Carry trade questions return
That backdrop has revived discussion of the yen carry trade, in which investors borrow in low-yielding yen to buy higher-yielding assets, including crypto at times. An unwind of such positions in August 2024, triggered by a surprise BOJ hike and weak US jobs data, coincided with a sharp drop in Bitcoin (BTC).
Some analysts caution against drawing direct parallels, but say softer signals from Tokyo could encourage position-building, leaving risk assets exposed if policy expectations shift.
