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The Japanese yen has fallen sharply in recent weeks, reaching levels not seen since a sudden surge in the summer that was reflected in global markets.

The yen sank below ¥150 against the U.S. dollar last week and has lost about 5 percent over the past month as investors bet on slower rate hikes from the Bank of Japan, while the U.S. Federal Reserve is also expected to raise interest rates be reduced more slowly than previously assumed. The dovish comments from Japan’s new prime minister, who had previously criticized the BoJ’s very loose monetary policy, have helped send the currency back into a downward trend, sending it to its lowest level in 34 years at the start of the year.

The move, investors said, has reignited interest in the so-called yen carry trade, in which investors borrow in yen to finance bets in higher-yielding currencies. That bet exploded spectacularly in August after the BoJ raised borrowing costs.

Hiroki Hashimoto, a senior fund manager at Royal London Asset Management, said the recent weakness “can likely be explained by the recent widening of interest rate differentials between the U.S. and Japan.” He said the risk of the ruling party losing its majority in the lower house in a snap election this month “could have led to less aggressive comments” from new Prime Minister Shigeru Ishiba.

This month, Ishiba said the economy was “not an environment” for further rate hikes by the BoJ.

The central bank raised interest rates this year for the first time since 2007. Its key interest rate is now at 0.25 percent and traders in the swap markets expect there will be little further increase at the BoJ’s two remaining meetings this year.

According to Tomasz Wieladek, chief European economist at asset manager T Rowe Price, the recent decline in inflation has already raised questions about how much Japanese borrowing costs are likely to continue to rise. “It is becoming increasingly difficult for the BoJ to continue raising interest rates without risking falling below the inflation target (2 percent),” he said.

Strong economic data in the US has also increased pressure on the yen due to the appreciation of the dollar.

Mark Dowding, chief investment officer at fixed income RBC BlueBay Asset Management, said the “big move in the yen was really driven by a big move in U.S. interest rate expectations,” coupled with investors timing the expected rate cuts across the board of China had pushed Japan back. Yen carry trades have made a “bit of a comeback,” he added.

The currency’s renewed decline last week prompted Japan’s top monetary official to warn that he was monitoring “speculative moves” in the market “with great urgency.” Japan spent a record 9.8 trillion yen ($65 billion) from late April to May to boost the yen.

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