The US dollar surpassed the 160-yen mark during Tokyo trading on Wednesday (May 25), reaching the psychologically significant level for the first time since late April before Japanese authorities intervened in the currency market.
The primary driver was rising geopolitical unease in the Middle East, prompting investors to flock to the greenback as a safe-haven asset.
This rally pushed the USD/JPY exchange rate to its highest in a month. Previously, in late April, the dollar had also touched 160 yen, forcing the Bank of Japan (BOJ) to sell large amounts of dollars to support the yen.
Analysts suggest that if the exchange rate remains elevated, Japan may need to consider fresh intervention measures to manage the situation.
The weak yen reflects market expectations that the US Federal Reserve will keep interest rates higher for longer, while the BOJ maintains its accommodative monetary policy.
