The Japanese yen touched 161.90 per dollar in overnight trading, a level not seen in nearly four decades, before recovering slightly after Finance Minister Satsuki Katayama disclosed a telephone call with US Treasury Secretary Scott Bessent. The two officials agreed to take “bold” and “firm” measures in currency markets whenever necessary, Katayama told reporters in Tokyo, a formulation that immediately lifted the yen to around 161 per dollar on intervention expectations.

Viewed from Tokyo, the pressure on the yen stems from widening interest-rate differentials. Markets now price a roughly 37% chance of one additional Federal Reserve rate increase this year, and a combined 47% probability of two or three hikes, according to CME FedWatch data cited by analysts. That prospect strengthens the dollar against currencies where rates remain low, and it intensifies the so-called carry trade, in which investors borrow yen to fund higher-yielding positions elsewhere. Japan’s last confirmed intervention, in May 2026, cost ¥11.73 trillion (about $73.6 billion), and the latest warning signals that authorities are again prepared to deploy reserves.

The yen’s weakness transmitted directly into emerging-market foreign exchange. The Mexican peso depreciated 1.18% to 17.56 per dollar, with traders in Mexico City pointing to the Japan-US call as a trigger for broader caution. The Hungarian forint, Swedish krona and Chilean peso also lost ground. In Argentina, where multiple exchange rates coexist, the official dollar held at 1,480 pesos for retail sale while the informal “blue” dollar traded at 1,495, keeping the gap at a narrow 3%. The Central Bank of Argentina continued its reserve-accumulation strategy, having bought US$2,601 million in May alone, though the peso’s real effective appreciation remains a subject of debate among Buenos Aires economists.

Risk assets felt the shift too. Bitcoin fell 4.8% to $62,252, with US spot ETFs recording net outflows of $68.3 million on Monday, according to Farside Investors data. Ether dropped 5.7% to $1,646, and the broader crypto complex retreated alongside US tech futures, which slid 2.8% on renewed anxiety over AI-infrastructure spending. Analysts in London note that bitcoin has been rejected near the $66,000 level and now tests support around $62,000; a break below that could open the way to $60,000. The next factual milestone is the Fed’s upcoming rate decision, which will either validate or unwind the rate-hike expectations currently driving the dollar and pressuring everything from the yen to digital assets.