Yen briefly drops to 161.93, then recovers after Japan-U.S. finance talks

2026-06-22

Yen falls to 161.93 against dollar before rebounding

Yen nears July 2024 low of 161.96

In New York foreign exchange trading on the 22nd, the yen at one point fell to 161.93 per dollar. The move brought the currency close to its July 2024 low of 161.96 and put it near the weakest level for the yen and strongest for the dollar in 39 years.

Talks prompt sharp rebound

After hitting 161.93 around 10 a.m. Eastern time on the 22nd, about 11 p.m. Japan time the same day, the yen recovered in two stages and was back to 161.08 before 11 a.m. This came around the time reports said Finance Minister Satsuki Katayama held online talks with U.S. Treasury Secretary Scott Bessent.

Intervention watch and dollar strength

The Japan-U.S. finance ministers' talks are positioned as a 'regular meeting' (Japanese and U.S. diplomatic sources) within a framework of close coordination that has continued until now. This time too, in addition to market moves including foreign exchange, the two sides aligned their views on the ceasefire agreement between the U.S. and Iran and issues surrounding artificial intelligence (AI).

In the market, there was also speculation that the government and the Bank of Japan carried out small-scale yen-buying intervention or a 'rate check,' in which financial institutions are asked to confirm levels, around the same time. Warnings about yen-buying intervention intensified, and the yen's weakening trend briefly paused. At 4 p.m. Eastern time, it was trading in the mid-161-yen range.

Still, the yen's weakness at present is mainly driven by dollar strength on expectations of U.S. rate hikes. Some see the move as consistent with fundamentals, making it hard to say the yen's decline is solely the result of speculative selling. There is a view that even if the government and the BOJ were to step in with yen-buying intervention, the effect would be limited.

Bank of America said in a note dated the 22nd that it expects the Federal Reserve to raise rates three times this year by 0.25 percentage point each, starting after September. The dollar index, which measures the greenback's strength against major currencies, is trading around 101, near its highest since May 2025.

The BOJ decided on the 16th to raise its policy rate to 1% in an additional rate increase. While Deputy Governor Shinichi Uchida signaled an intention to continue raising rates, markets broadly expect the pace to remain slow at around once every six months. Expectations for a widening Japan-U.S. interest-rate gap are supporting dollar buying.

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