The exchange rate of the Japanese yen against the US dollar fell to its lowest level in nearly 40 years.

Affected by the continued tensions in the Middle East and factors such as investors selling yen, the exchange rate of the yen against the US dollar in the New York foreign exchange market once fell to the range of 1 US dollar to 163 yen (Eastern Time, the 21st), hitting its lowest level since December 1986. Analysts believe that the recent escalation of the situation in the Middle East has raised concerns in the market about disruptions to energy transportation, which may push up international oil prices. As Japan is highly dependent on energy imports, the market expects that rising oil prices will widen Japan's trade deficit, leading investors to sell yen and buy US dollars. At the same time, domestic factors in Japan have also kept the yen's performance under pressure. On the one hand, the interest rate differential between Japan and the major economic entities in Europe and America is still significant; on the other hand, the market expects that Japanese Prime Minister Sanae Takaichi will continue to implement the so-called “proactive fiscal policy,” relaxing fiscal discipline, which further increases the pressure on the yen to depreciate. As the yen exchange rate hits its lowest point in nearly 40 years, expectations that the Japanese government and central bank will intervene again in the foreign exchange market are rising. (Xinhua News Agency)