The U.S. dollar weakened sharply Monday against the Japanese yen after U.S. President Donald Trump and Japan’s Finance Minister Satsuki Katayama confirmed both sides had intervened in markets. Before late last week, the dollar was trading above 163 yen, touching 40-year highs. After regulators were suspected of stepping in, it fell below 160 yen, then to nearly 155.20 yen early Monday. The yen’s prolonged weakness, which has attracted millions of bargain-hunting tourists, is fueling inflation in an import-dependent Japan. However, structural factors behind this weakness remain: the gap between U.S. and Japanese interest rates stays wide, Japan’s energy import burden remains significant, and the Bank of Japan continues to raise rates more slowly than the market would normally require.
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