Better do somethin.’ It’s gettin’ out of hand. And the intervention ain’t workin.’

The yen on Wednesday weakened past 163 per dollar, as the specter of higher crude prices on a return to all-out war in the Mideast cast a pall. The prospect of a new tariff push from Donald Trump didn’t help.

At the intraday highs mid-week, USDJPY was 163.24. Satsuki Katayama tried to talk it down, but intervention threats have proven insufficient to arrest the slide, even when the finance ministry follows through.

The last time the yen was at these levels, the original “Top Gun” was the top-grossing film in America and Madonna was 27 years old.

Katayama on Wednesday blamed “a sudden turn for the worse in the situation between the US and Iran” for renewed pressure on the currency.

160’s supposed to be the new line in the sand. But the finance ministry’s most recent foray into the market, on April 30, was for naught. Katayama can conjure an impressive filled candlestick for a day, but you can’t beat the fundamentals.

I’ve been over this countless times, most recently on July 9. Japan relies almost exclusively on imports for its oil, so surging energy prices tend to put upward pressure on dollar-yen, exacerbating FX pass-through inflation and chancing a terms of trade shock.

At the same time, Japan has a quasi-populist head of state running expansionary fiscal policy despite the world’s largest public-sector debt burden. Sanae Takaichi’s no idiot. She understands that one of, if not the main, reason she’s in power in the first place is that Japanese voters are concerned about the cost of living. But no protégé of Shinzo Abe’s is going to preside over a period of deep fiscal retrenchment, no matter how much they might admire Margaret Thatcher. (Speaking of 1986.)

Relatedly, Takaichi’s not enamored with the idea of a rapid exit from monetary policy accommodation. Despite the bank’s belabored efforts to normalize the world’s most abnormal policy settings, the yen remains a low-yielder and rate differentials still favor the dollar despite moving dramatically in the yen’s favor over the last 18 or so months.

There’s that chart again. It virtually screams “crisis.” 10-year rate diffs have compressed by half since early 2025, and the yen’s (worse than) unresponsive.

On Wednesday, “people familiar with the matter” told Bloomberg the BoJ’s open to a faster rate-hike cadence, but… well, it’s difficult to imagine a scenario where the bank’s willing, able and allowed to raise rates quick enough and by enough to fix this.

This time two years ago, the BoJ unleashed all sorts of chaos across global markets when they braved a second rate hike in four months. Can you imagine what might ensue if they tried to hike at every meeting or — chuckles — in larger intervals?

The call rate’s 1%, and that’s a three-decade high. Two-year yields in Japan are likewise perched at their highest levels in 30 years. Monetary policy’s doing what it can. Higher doses of the cure administered at shorter intervals chance killing the patient.

“The defensive currencies remain soft. That may be because equity markets remain reasonably bid despite the rise in [crude], but a far more important factor appears to be low interest rates and central banks that will be slow to hike,” ING’s Chris Turner said, adding that he expects dollar-yen “to stay bid during this period of high energy prices.”

As for additional FX intervention by the finance ministry, Japan’s sitting on plenty of firepower, what with its $1.14 trillion of Treasurys. But if the April 30 experience is any indication, burning that is just good money after bad. The intraday USDJPY low was 155 or so on May 6. Here we are at 163 and it’s not even August.

Scott Bessent might help. Presumably, Trump could be convinced that a free-falling yen’s not in America’s interests, and coordinated intervention would send a much stronger message than the one markets are ignoring from Katayama. And it’s certainly possible oil will retreat anew when Trump invariably folds again in the Strait fearing domestic voter backlash from high pump prices.

But I gotta tell you, this feels dicier over time. Catastrophists have long claimed Japan will one day reach a tipping point beyond which markets revolt against the country’s self-defeating efforts to square various circles.

I assumed I’d be long dead before Japan ever faced such a reckoning. But I thought the same about all sorts of eventualities I ultimately lived to see. My luck in that regard never seems to improve.