The Japanese yen reached its highest level in five months, rising from approximately 164 yen per dollar to 155.8 yen in early September 2026. The Japanese government spent a record 15.39 trillion yen, roughly 100 billion dollars, intervening in currency markets during July and August 2026. This massive buying campaign reversed a trend that had pushed the yen dangerously close to a 40-year low against the dollar. Growing expectations for a Bank of Japan rate hike also contributed to the recovery by triggering the closure of speculative short positions. A stronger yen could weigh on Japanese equities and pose risks for broader risk assets if the carry trade unwind becomes disorderly.
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