The Japanese yen slid to 162.19 per dollar early Tuesday, its weakest level against the U.S. currency since 1986, and Finance Minister Satsuki Katayama said Tokyo was prepared to take decisive action to counter excessive moves.
The four-decade low puts Japan back in the position it has occupied for much of the past two years: defending a currency the market keeps pushing lower while the interest-rate gap with the United States continues to favor the dollar. It also lands as Tokyo prepares to raise visa fees as much as fivefold on July 1, the first such increase since 1978, in a policy the government has tied directly to exchange-rate moves.
What shifted
The yen's drop to 162.19, recorded at 1:27 a.m. Eastern time according to LSEG data, broke through the cycle lows that drew Tokyo into the market last spring. Between April and May, Japan deployed more than 11.7 trillion yen, or about $72.8 billion, in reserves to support the currency, briefly lifting it from 160.39 to 156.6 on April 30 before the slide resumed.
Katayama's warning Tuesday went further than recent statements. "That includes taking decisive action, as confirmed between Japan and the U.S.," she said. Chief Cabinet Secretary Minoru Kihara told reporters the government would work to build an economy less vulnerable to currency swings while staying ready to intervene, and declined to comment on the yen's level.
The Bank of Japan has also tightened. Policymakers recently lifted the benchmark rate to 1 percent, the highest in more than three decades and the first increase since December's move to 0.75 percent. The central bank cited inflation pressure stoked in part by the energy-price spike during the Iran conflict.
On the curve
The sell-off rippled into Japanese government bonds. The 40-year yield rose 7 basis points to 3.779 percent and the 30-year yield gained nearly 8 basis points to 3.914 percent, extending a months-long climb at the super-long end of the curve.
Nomura's North Asia chief investment officer, Julia Wang, said the new cycle low raises the odds of official action even though intervention is not formally tied to any specific level. "Intervention shouldn't be dependent on a certain level. It depends on the nature of the currency move, the nature of dollar-yen... This is a cycle high; it's a new cycle high. It probably is a sensitive level, it will re-ignite some of the anxiety around currency weakness domestically," Wang said.
She added that the broader outlook remains weak because wide interest-rate and real-yield differentials continue to favor carry trades, in which investors borrow cheaply in yen and park the proceeds in higher-yielding assets abroad.
At the border
From July 1, the application fee for a single-entry visa will rise to 15,000 yen, or about $93, from 3,000 yen, and multiple-entry visas will cost 30,000 yen, up from 6,000 yen. The departure tax for all travelers will triple to 3,000 yen from 1,000 yen. Tokyo said the changes were needed "in order to respond to the current price increases and fluctuations in exchange rates."
The weak yen has helped drive record tourism, with arrivals reaching 36.8 million in 2024 and 42.6 million in 2025. Foreign travelers now account for 74 percent of departures from Japan, compared with 20 percent to 30 percent before the Abenomics program began in 2013, said Yuki Masujima, chief economist at Deloitte Tohmatsu Group.
Counterpoint
Wang argued any Tokyo response is likely to prove brief. "I don't think it will be a material factor that derails the market," she said, adding that intervention would be unlikely to change the longer-term direction of the currency. Today's dossier draws on center-tier wire reporting only; partisan domestic Japanese commentary and U.S. Treasury reaction were not represented in the source set, and Washington had not publicly responded to Katayama's invocation of a coordinated stance by press time.
Katayama and her counterparts at the Bank of Japan have given no timetable for action. The next test is whether the yen holds near 162 into the Tokyo open Wednesday or forces Tokyo's hand before the visa and departure-tax changes take effect July 1.