The Yen Is Plunging. So Is Japan’s Defense Budget.

The yen’s collapse this yearto a nearly four-decade low is undermining Japan’s plans for its largest military buildup in postwar history.

The government has slashed orders for aircraft, and officials warn that further cuts may be imminent. Japan buys much of its military equipment from American companies, in transactions done in dollars. The government’s purchasing power has been drastically eroded by the yen’s diminishing value.

“What we are achieving in terms of actual defense capabilities and our original target — the two are not lined up,” Satoshi Morimoto, a former Japanese defense minister, said in an interview. The value of the defense budget over five years “has effectively been reduced by 30 percent,” Mr. Morimoto said.

Japan’s currency headache comes at a critical juncture. The country’s large boost in military spending was intended to fortify defenses as Tokyo confronts mounting missile threats from North Korea and other challenges posed by China, including fears of a potential China-Taiwan conflict.

In 2022, Prime Minister Fumio Kishida of Japan announced a new national security strategy that would more than double the amount set aside for defense. The budget of 43 trillion yen over five years, equivalent to around $319 billion at the time, would help Japan deter attacks by giving it the ability to target bases in enemy territory.

The new budget broke with longstanding precedent on spending restraints and dependence on U.S. forces. Mr. Kishida hailed the surge in military spending as a “turning point” in Japan’s history.