FX.co ★ Yen Languishes at 40-Year Low

The Japanese yen hovered around ¥162.5 per dollar on Thursday, holding near its weakest level in four decades and keeping traders on alert for potential currency intervention ahead of a US public holiday, when thinner market liquidity could amplify the impact of any official move. Finance Minister Satsuki Katayama said on Wednesday that authorities stood ready to respond appropriately to developments in the foreign exchange market at any time, reiterating earlier warnings.

The yen also remained under pressure against the dollar even after Federal Reserve Chair Kevin Warsh noted that US inflation expectations had eased over the past month, indicating no urgency to raise interest rates. At the same time, investors remain unconvinced that the Bank of Japan will speed up policy tightening as it sticks to a gradual normalization path. Persistent carry trades and the still-wide interest rate differential between Japan and the United States continue to weigh on the Japanese currency.