The Japanese yen has dropped to its weakest level against the U.S. dollar in 40 years, a milestone that benefits foreign tourists but raises concerns within the Japanese government.
The currency’s decline makes travel and shopping in Japan cheaper for international visitors. Tourism spending has surged as a result.
Tokyo officials, however, are growing uneasy. A weak yen inflates import costs for energy and food, straining households and businesses.
The latest slide has put foreign-exchange traders on high alert. They are watching closely for a fresh round of yen buying by Japanese authorities.
Intervention remains a possibility. Japan’s finance ministry has previously stepped in to stabilize the currency when movements became too volatile.
Markets are now speculating on the exact trigger that would prompt action. Analysts point to specific exchange rate thresholds and speed of decline as key factors.
For now, tourists continue to benefit from cheaper yen-denominated prices, while policymakers weigh the economic risks of unchecked depreciation.
