Yen Plummets to All-Time Low Amid BOJ Policy Fears

The Japanese yen experienced an unprecedented collapse in early 2026, plummeting to an all-time low of 180 against the U.S. dollar. This marked a 25% decline from the previous year and triggered global market turbulence.

The primary trigger for this collapse was the Bank of Japan's (BOJ) decision to maintain its negative interest rate policy while the U.S. Federal Reserve kept rates elevated, creating a yield gap that drove massive capital outflows from yen-denominated assets.

Japan's government debt, which exceeds 250% of GDP, raised concerns about fiscal sustainability, prompting foreign investors to dump Japanese bonds. The depreciation accelerated in February 2026 when the BOJ revised its inflation forecast upward but failed to signal any near-term policy tightening, leading market participants to interpret this as a lack of commitment to defending the currency.