The yen selloff intensified in New York on June 22, pushing the USD/JPY pair to 161.93, just shy of the 39.5-year low set in December 1986. Taipei Fubon Bank noted that while markets expect another rate hike from the Bank of Japan before year-end, the wide US-Japan yield differential continues to fuel speculative short positions against the yen.
Japan’s Intervention Tab: $73.4 Billion in One Month
Japan's Ministry of Finance reported on June 22 that foreign securities holdings declined by $75.6 billion in May, the largest monthly drop on record. Finance Minister Katsuyuki Katayama confirmed that intervention spending reached a record ¥11.73 trillion (approx. $73.4 billion) during the month. Daisuke Ueno, strategist at MUFG Morgan Stanley, argued that as long as the real policy rate gap between the US and Japan persists, intervention's "magic" cannot permanently suppress yen selling pressure.
Emergency Talks Between Finance Chiefs, Focus on July Rate Decision
Katayama held an online meeting with US Treasury Secretary Scott Bessent on Monday evening, where currency matters were likely discussed. Market attention now shifts to the BOJ's July rate decision and possible further intervention. Speculators continued to push the yen lower, with USD/JPY climbing steadily during Tokyo hours to hit 161.93 intraday.
Weak Yen Ripple Effects: Import Inflation and Crypto Capital Flows
A weaker yen boosts Japan's export competitiveness but drives up import costs, fueling inflation. Investors holding yen deposits or yen-denominated ETFs face growing FX losses. Meanwhile, the depreciating currency is pushing some Japanese capital toward alternative stores of value. Listed firm Metaplanet recently announced it would purchase ¥54 billion worth of Bitcoin (equivalent to hundreds of millions USD), aiming to hold 210,000 BTC by 2027. Its share price surged 22% in a single day, highlighting Bitcoin's appeal as an alternative reserve asset amid yen weakness.
If the BOJ accelerates rate hikes, capital could flow back from Asian markets to Japan, potentially triggering volatility in TSMC's supply chain and regional equities. For now, the yen's decline remains the dominant narrative.