The yen may extend declines to ¥140 per dollar and that could trigger the government to spend $100 billion (about ¥12.9 trillion) to limit further losses, according to Bank of America analysts.
The currency hasn’t weakened to ¥140 against the dollar since 1998, but it may be pushed to that level by a fresh surge in U.S. Treasury yields, analysts with the bank, including Shusuke Yamada in Tokyo, wrote in a note published Monday.
The yen dropped to ¥131.25 against the dollar last month, the weakest since 2002, after the Bank of Japan reiterated its intention to keep 10-year bond yields at 0.25% to help revive the economy. The Finance Ministry then issued its most strongly worded warning yet on the currency’s slide, saying it would respond "appropriately” to abrupt moves in the currency.