The Japanese yen staged a short-lived recovery after plunging past 163 per dollar, a threshold not breached since 1986.
The currency initially weakened sharply before finding support amid speculation that the Bank of Japan may accelerate its interest-rate tightening cycle to defend the currency.
Trading remained volatile as the pair oscillated around the historic support level.
The brief rally was driven by market participants adjusting their expectations for the central bank’s policy path, with many now anticipating a more aggressive stance to counteract the yen’s depreciation.
However, the rebound quickly ebbed, leaving the currency near multi-decade lows.
The move underscores the growing pressure on the Bank of Japan to balance domestic economic resilience with external currency stability.