Dollar Hits 40-Year Peak at 162.77 Yen as Japanese Jawboning Fails

The dollar broke through 162.77 yen in early Asian trading July 1—its strongest since 1986—after piercing the 161.96 technical barrier on June 30 despite repeated Japanese verbal warnings. Market participants judged the warnings toothless: the interest rate gap between U.S. and Japanese policy rates remains too wide to reverse the carry trade that keeps selling yen profitable. Traders are now watching whether direct foreign exchange intervention follows.