Japan, US discuss yen slide as currency nears 1986 low

The yen’s slide has pushed Japan and the United States back into currency diplomacy just as the dollar tests a level that would mark the weakest yen since 1986. Late Monday, the Japanese currency briefly weakened to about 161.9 per dollar, and a move above 161.96 would take it to a nearly four-decade low. By Tuesday morning in Asia, it was still trading around 161.58, keeping pressure on officials in Tokyo and Washington.

For U.S. readers, the move matters well beyond the foreign exchange desk. A weaker yen can make Japanese imports cheaper in dollar terms if companies pass through the currency move, while also lifting the overseas earnings of U.S. companies with heavy Japan exposure. It can reshape tourism flows as well, making Japan more affordable for Americans and more expensive for Japanese travelers abroad. For exporters, including Japanese automakers and manufacturers competing in the U.S. market, the currency swing can alter pricing power and profit margins in a matter of days.

Japan’s finance minister, Satsuki Katayama, said the online meeting with Treasury Secretary Scott Bessent on June 22 was a follow-up to the recent Group of Seven leaders’ summit in Évian, France. She said the talks covered global financial markets, including developments around the Strait of Hormuz and their potential impact. Katayama said Japan and the United States share a firm mutual understanding that decisive action will be taken if necessary, but she stopped short of confirming whether intervention was explicitly discussed.

The backdrop is a Japanese intervention campaign that already set a record. Japan’s Finance Ministry later disclosed that it spent 11.7349 trillion yen, or about $72.44 billion, intervening from April 28 to May 27, the largest monthly currency intervention on record. That surpassed the previous high of 9.79 trillion yen in the April-May 2024 round, which briefly pushed the yen from around 160.245 per dollar toward the 155 area before the effect faded. The scale of the latest spending shows how worried Tokyo is about imported inflation, household costs and the political risk of a weaker currency.

The messaging from both capitals suggests officials are trying to manage volatility more than reverse the yen’s direction. In May, Bessent said the United States and Japan both believe excess volatility in currency markets is undesirable, and a joint U.S.-Japan statement in September 2025 said exchange rates should be market-determined and intervention reserved for excess volatility. Japanese officials have given few clear signals about whether they will act again, a quieter approach that appears aimed at preserving surprise if they choose to buy yen once more. For markets, the key question is no longer whether Tokyo wants a stronger currency in the abstract, but whether it can slow a disorderly slide without triggering another round of panic trading.