Japanese yen falls to two-month low against the dollar

Expectations of Fed rate hikes are widening the policy gap between the US and Japan, pushing the yen close to the psychologically important 160 level

On Thursday, the Japanese yen slipped to its weakest level against the US dollar in more than two months. Expectations of further US interest rate hikes are widening the monetary policy gap between Washington and Tokyo, and the yen has moved close to the psychologically key level of 160 yen per dollar.

At 05:54 GMT, the yen was trading at 159.674 per dollar. This prompted officials in Tokyo to renew their warnings about possible intervention in the currency market.

Dollar strengthens across the board

The dollar firmed not only against the yen but also against other major currencies. The index that measures the US dollar against a basket of major peers recorded its highest close since April 2025.

Inflation and hawkish Fed rhetoric

Market participants raised their forecasts for tighter US monetary policy after October inflation figures came in higher than expected. The dollar was also supported by a series of hawkish comments from Federal Reserve officials, who voiced concern about persistent price pressures and did not rule out a larger, 50-basis-point rate hike.