Yen slides to 2-year low as USD/JPY passes 161.81

The Japanese yen fell to its weakest level in nearly two years against the U.S. dollar on Thursday, June 18, 2026, intensifying speculation that authorities in Tokyo may intervene to support the currency. The USD/JPY pair reached 161.81, breaching a key threshold that previously triggered government action and approaching levels not seen since the 1980s.

The yen's decline is primarily driven by a widening interest rate gap between the United States and Japan. The Federal Reserve held its benchmark rate steady this week but signaled a hawkish stance, with nearly half of its policymakers projecting at least one more rate increase this year. This has bolstered the U.S. dollar and Treasury yields, attracting yield-seeking investors away from the yen. In contrast, the Bank of Japan recently raised its policy rate to 1%, its highest level since 1995, but this move has failed to counter the overwhelming momentum behind the dollar.

Japanese officials have issued repeated warnings about excessive currency moves. Chief Cabinet Secretary Minoru Kihara stated on Thursday that authorities are prepared to respond appropriately to currency moves as needed at any time. Finance Minister Satsuki...