The Japanese yen has reached its weakest level against the US dollar in over 30 years, prompting emergency measures from Japan’s financial authorities, according to reports from The Wall Street Journal. Japan intervened after the USDJPY reached 160.17, taking action to stabilize its currency, which is the world’s third most-traded. The Bank of Japan is said to have intervened overnight, causing the US dollar to weaken by 1% against the yen. Prior to intervention, the USDJPY was trading close to 160, but authorities managed to bring it below 155. The decline in the Japanese yen can be attributed to diminishing expectations of interest rate hikes by the Bank of Japan, while the US Federal Reserve remains hawkish. As a result, the USDJPY currently stands at 156. Adam Kobeissi, editor-in-chief of The Kobeissi Letter, believes this situation is a consequence of uncontrolled deficit spending. He points out that the exchange rate has shifted dramatically from 130 yen to 160 yen for one US dollar, which is a significant change for a major currency. The Bank of Japan has maintained interest rates near zero despite the slide in its currency. Although interest rates were raised last month for the first time since 2007, the Japanese yen has still lost nearly 20% of its purchasing power against the US dollar in the past year. Kobeissi argues that this volatility is a preview of what can occur when deficit spending spirals out of control. Japan currently has a debt-to-GDP ratio of over 260%, and he warns that the US is projected to reach a similar ratio in 30 years. Kobeissi emphasizes the importance of reducing deficit spending to prevent future generations from paying for these mistakes. The Federal Reserve’s upcoming meeting is expected to have a significant impact on Japan. With inflation on the rise, it is anticipated that Chairman Jerome Powell will maintain a pause on high interest rates. Bloomberg highlights that the Fed’s decisions will be crucial for Japan, as the central bank’s policy meeting may signal the need to keep interest rates elevated to support the US dollar and undermine the appeal of yen assets. Earlier this month, Japan’s finance minister expressed concerns about the yen’s decline to US Treasury Secretary Janet Yellen, leading market participants to believe that intervention measures may be on the horizon.