The yen temporarily fell into the 163-yen-per-dollar range in the New York foreign exchange market on July 21, making it the lowest level for the Japanese currency since December 1986.

The decline is believed to have been driven by renewed demand for the U.S. dollar as a safe-haven asset amid re-escalating tensions in the Middle East following a renewed exchange of attacks between the United States and Iran.

Expectations that the US Federal Reserve will raise interest rates before the end of the year also remain.

The outlook has continued to fuel demand for the dollar, putting further downward pressure on the yen.

Market participants are also speculating that the Japanese government and the Bank of Japan could intervene in the foreign exchange market to curb the yen's rapid depreciation.