New Delhi, Aug. 5 -- The Japanese yen has fallen to its weakest level in nearly four decades, breaching the 160-per-dollar mark for the first time since 1986. As the world's second most-traded currency pair, sharp dollar-yen movements have far-reaching implications for global trade and financial markets, prompting Japanese authorities-and even the US-to intervene in support of the currency.

While the yen's latest slide reflects a higher energy import bill and the wide US-Japan interest-rate differential, the currency is likely to remain under pressure unless Japan addresses deeper structural challenges, including persistent fiscal expansion and weak long-term growth. Decades of unconventional monetary easing have also constrained Tokyo's...