The exchange rate of the Japanese yen against the US dollar has fallen to a near 40-year low.

Due to the ongoing tension in the Middle East and factors such as investors selling off the yen, the exchange rate of the Japanese yen against the US dollar in the New York foreign exchange market on the 21st once fell to a range of 163 yen to 1 US dollar, hitting a new low since December 1986. Analysts believe that the recent escalation of the situation in the Middle East has raised concerns in the market about disruptions in energy transport pushing up international oil prices. As Japan heavily relies on energy imports, the market expects that a rise in oil prices will increase Japan's trade deficit, leading investors to sell off the yen and buy US dollars. Meanwhile, domestic factors in Japan continue to suppress the movement of the yen. On one hand, interest rate differentials between Japan and major Western economies remain large; on the other hand, the market anticipates that Japanese Prime Minister Naoto Kan will continue to implement the so-called "aggressive fiscal policy," relaxing fiscal discipline, which further adds to the pressure on the depreciation of the yen. With the yen exchange rate hitting a near 40-year low, expectations in the market for intervention by the Japanese government and central bank in the foreign exchange market are increasing.