Tokyo's Nikkei 225 closed at a record 72,353.96 on Monday, climbing 1.55% after touching an intraday high of 72,831. The rally added more than ¥25.74 trillion ($156 billion) to the index's market value. But the yen's slide kept investors on edge — it weakened to 161.7 per dollar, just shy of 161.96, a level that would mark its weakest since 1986.
Why the yen keeps falling
Japan's currency has been under pressure even after the Bank of Japan raised its benchmark rate to 1% from 0.75% — the highest since 1995. The BOJ's move was meant to narrow the gap with U.S. rates, but so far it hasn't stopped the yen's decline. The Finance Ministry spent a record ¥11.73 trillion ($73.4 billion) supporting the yen through late May, and its foreign securities holdings fell by $75.6 billion from April to the end of May, matching the scale of intervention. Still, the yen keeps inching toward that critical 161.96 mark.
The intervention question
Japan's latest round of yen-buying was the largest ever, but the currency's weakness has persisted. The Finance Ministry's shrinking foreign securities stash shows how much firepower Tokyo has already used. Traders are now watching closely to see if authorities step in again if the yen breaks 161.96. The BOJ's rate hike was supposed to help, but the market isn't convinced — the gap between Japanese and U.S. yields remains wide.
Asian markets rise on US-Iran talks
The Nikkei's record wasn't the only good news in Asia. South Korea's KOSPI gained 0.7% and China's SSE Composite jumped 1.78%. The broader advance followed constructive U.S.-Iran talks in Switzerland, with technical negotiations continuing. That helped calm worries about oil supply disruptions, giving equities a lift across the region.
Whether the yen can hold below 161.96 or whether Tokyo will need to intervene again is the open question that hangs over the market. The next BOJ meeting could provide clues, but no date has been set.
