On the foreign exchange market, the yen traded at 160.39 yen per dollar, the weakest level in approximately 38 years since December 1986.

As the view spread that the interest rate gap between Japan and the United States, which is the reason for the yen’s depreciation, would not narrow anytime soon, there was a growing trend to sell yen and buy dollars in order to invest funds at higher interest rates.

From late April to May, the government and the Bank of Japan intervened in the foreign exchange market by more than 9.7 trillion yen, the largest amount ever on a monthly basis, but the rate returned to pre-intervention levels in about two months, leaving them faced with the difficult decision of whether to intervene again.