Japan's Yen Hits 40-Year Low as Rate Divergence with US Widens

The yen weakened to 162.41 per dollar on June 30, 2026—its lowest since 1986. Japan's central bank holds rates near zero while the Federal Reserve keeps policy tight, widening the rate gap. This differential drives carry trades that erode yen demand; even Japan's intervention provides only brief relief. Sustained recovery requires either Fed rate cuts or Bank of Japan hikes. Neither looks imminent.