Japanese airlines among worst hit by historically low Yen value

It has been 40 years since the currency was this weak compared to the U.S. dollar

Rowan Dunne

Published

4 hours ago

Japan is steering through rough economic seas this year. Companies and families face fresh worries as global pressures and home-grown problems shake the world’s third-largest economy.

The yen has now fallen to its lowest level against the United States dollar in 40 years. It recently dropped to around 162 yen per dollar, the weakest point since 1986. A big gap in interest rates between Japan and America drives much of this slide.

Strong U.S. growth and hints of higher rates from the Federal Reserve support the dollar. Meanwhile, the Bank of Japan moves more slowly. Investors keep borrowing cheap yen to buy higher-yielding assets elsewhere, which adds extra downward pressure. Japan spent 11.7 trillion yen in April and May to support its currency, but the gains did not last long.

This weak yen hurts businesses that rely on imports priced in dollars. It makes foreign goods and fuel more expensive in local terms. Japanese airlines feel the pain sharply. Carriers such as Japan Airlines Co Ltd (OTCMKTS: JPNRF) (FRA: JAL) and ANA Holdings Inc (OTCMKTS: ALNPF) (FRA: ANCA) have seen fuel costs climb fast because of global tensions. They now expect lower profits this year as expenses rise while the weak yen turns those bills even higher.

Convenience store owner Seven & I Holdings Co Ltd (OTCMKTS: SVNDF) (FRA: S6M), which runs 7-Eleven, also struggles with costlier imported products. Moreover, utility companies face the same issue with energy imports. These higher prices squeeze profits and leave customers cautious about spending, especially in an economy long used to low inflation or even falling prices.

Nonetheless, the weak yen is not all bad news. Big exporters like Toyota Motor Corp (TYO: 7203) (NYSE: TM) and Sony Group Corp (NYSE: SONY) (OTCMKTS: SNEJF) are raking in bigger profits when they bring overseas earnings home. Tourists are also flooding in, drawn by cheaper hotel stays, shopping and dining.

The Japanese yen just fell to within a whisker of its weakest level in 40 years, and the reason should unsettle every market on Earth. This is not really a story about Japan. It is the bill arriving for the longest experiment in cheap money in modern history, and the entire world… pic.twitter.com/rzbAIsgz2I

— Shanaka Anslem Perera ⚡ (@shanaka86) June 29, 2026

Japan fights back, but to little avail

The country has taken clear steps to tackle the problem.

The Bank of Japan recently raised its main interest rate to 1 per cent – the highest level in many years. Officials want to slowly normalise policy and manage rising prices linked to energy.

Finance Minister Satsuki Katayama says the government stands ready to act against big currency swings, but time will tell if his words carry weight. After big spending earlier this year, Japanese leaders now focus on building an economy that can better handle currency ups and downs.

Moving away from the dollar

Japan is also working to cut its dependence on the American dollar for trade.

It just teamed up with India on a new system for direct payments in yen and rupees. This setup skips the dollar, which should lower costs and speed up deals for businesses in both countries.

The two governments plan to include this cooperation in a joint statement during an upcoming leaders’ meeting. Japan already uses similar arrangements with Indonesia and eyes more with others like Malaysia.

These moves show Japan’s drive to adapt amid these challenges. While the weak yen creates real headaches now, the country’s mix of policy changes and new trade links aims to provide relief.

🇯🇵🇮🇳BREAKING: Japan and India are moving to settle trade directly in yen and rupee, bypassing the dollar entirely, per Nikkei.

Right now, almost all Japan-India trade routes go through the dollar. A Japanese company selling to India converts yen to dollars, then dollars to… pic.twitter.com/HMZW0RzdDp

— Crypto Jargon (@Crypto_Jargon) June 30, 2026