Japanese yen falls to $155 per dollar, weakest since January

Japanese Yen Falls to $155 per Dollar, Weakest Since January

As of November 20, 2025, the Japanese yen has experienced a significant decline, trading at approximately 155 yen per US dollar. This marks the weakest position for the yen since mid-January 2025. The depreciation of the currency is largely attributed to a stark interest rate disparity between the United States and Japan, creating a favorable environment for currency traders.

Key Details

The Federal Reserve, the central bank of the United States, is currently maintaining interest rates between 3.75% and 4.00%. In stark contrast, Japan"s interest rates remain near zero, specifically at 0.5%. This substantial gap in interest rates presents a lucrative opportunity for traders who are borrowing yen at nearly zero percent, converting those funds into US dollars, and investing in US Treasury bonds that yield approximately 3.75% or higher. This practice has led to a surge in yen selling as traders capitalize on the rate differential, further weakening the yen.

The Bank of Japan (BOJ) faces a challenging situation as it contemplates raising interest rates to defend the yen. However, the Japanese economy has recently contracted by 1.8% on an annualized basis in the last quarter, marking the first economic contraction in six quarters. Raising interest rates at this juncture could stifle any remaining economic growth, leaving traders confident that the BOJ will refrain from taking action to strengthen the yen.

In an effort to stimulate the economy, Prime Minister Takaichi is expected to announce a fiscal stimulus package ranging from 17 trillion to 20 trillion yen. While this initiative aims to bolster economic activity, it may inadvertently exacerbate the yen"s decline. The bond market has reacted negatively, pushing Japanese government bond yields to multi-year highs as investors anticipate increased deficits, mounting debt, and a weaker yen, which complicates the repayment of obligations.

The underlying issues facing Japan extend beyond mere fiscal spending. The country is grappling with structural challenges, including an aging population, stalled economic growth, and entrenched deflation expectations. Analysts argue that simply increasing government spending will not resolve these deep-rooted problems; instead, it may signal desperation, leading to further depreciation of the yen.

Impact on the Economy

The continued fall of the yen is expected to have significant implications for the Japanese economy. As the yen weakens, the cost of imports rises, contributing to inflationary pressures. Recent data indicates that wages in Japan grew by only 1.9% last month, failing to keep pace with rising prices. Consequently, ordinary Japanese citizens may find their purchasing power diminished as inflation outstrips wage growth.

This economic strain could prompt the government to implement additional stimulus measures to alleviate the financial burden on citizens, which in turn could lead to further depreciation of the yen. Analysts warn of a potential "doom loop," where the government is compelled to spend more to cushion the impact of rising costs, thereby weakening the currency even further.

Should the yen reach 160 per dollar, there is speculation that the Japanese government might intervene in the currency markets. However, such interventions are often viewed as temporary measures, lacking the fundamental support required for sustained yen strength. The outlook for the yen remains bleak unless the Federal Reserve significantly cuts interest rates or Japan successfully addresses its fiscal challenges, neither of which appears imminent.

For related coverage on economic developments, see our article on the S&P 500 losses and Bitcoin fluctuations.