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Yen stays near four-decade lows despite Asia equity selloff
The yen held near 164.00 and stayed inside a 30-pip range even as Korea’s benchmark fell close to 11% and Japan’s index sank nearly 4%.
FXStreet notes the yen traded just below 164.00 on Tuesday, marginally weaker for the day, and remained boxed in roughly a 30-pip range, with a floor above 163.50 and a peak only a few ticks below its recent cycle extreme. The outlet says that extreme marks the yen’s weakest level versus the dollar in about four decades, and that the pair had spent three sessions grinding near that level without a meaningful pullback.
The lack of yen movement stood out against a broad Asian risk shock, FXStreet says. Korea’s benchmark fell close to 11%, triggering its eighth circuit breaker of the year after a report that a Chinese manufacturer began mass production of lithography equipment long monopolized by a single Dutch supplier, while Japan’s benchmark dropped nearly 4% to its weakest level since May 22, with Taiwan’s index down 4.7% and AI-linked trades under pressure across the region.
FXStreet attributes the yen’s steadiness to how it is being used in carry and funding dynamics rather than as a traditional haven. With implied volatility staying compressed and Japan’s policy rate at 1.00%, the outlet says the funding leg of a carry position remains cheaper to hold, supported by the contrast between Japan’s 1.00% rate and US front-end yields above 4%.
The article also points to recent intervention history, saying Japan’s Ministry of Finance spent roughly 11.7 trillion yen, about $72 billion, defending the currency between late April and late May, and that the rate later returned above the level that triggered the intervention within six weeks. FXStreet adds that officials have since shifted away from verbal warnings toward tactics aimed at keeping timing uncertain, while noting the ministry has said it would act decisively against excessive moves.