Amid a stronger US dollar rally, the Japanese yen slipped to its weakest level in four decades on Tuesday, raising expectations that Tokyo could intervene again to support the currency, according to reports.
The dollar climbed to 162.41 yen, marking its highest level against the Japanese currency since 1986, before easing marginally to 162.34 yen, Reuters reported.
Japan Finance Minister Satsuki Katayama said authorities were prepared to take "appropriate action" if needed, but stopped short of issuing a stronger warning. Currency analysts said the dollar remains the key driver of market moves, with expectations of a stronger US interest rate outlook supporting the greenback, according to the report.
Rising US inflation, steady economic growth and signals from Federal Reserve policymakers that rate hikes could return have boosted demand for the dollar. The dollar index, which tracks the currency against six major peers, stood at 101.32 and was on course for a 1.4% gain in the second quarter, following a 1.6% rise in the first quarter, the report stated.
The yen has struggled despite the Bank of Japan's recent rate increase, as interest rates in the US remain significantly higher. The gap has encouraged investors to borrow cheaply in yen and invest in higher-yielding assets, keeping pressure on the Japanese currency. Japan previously spent nearly 11.7 trillion yen ($72.25 billion) in April and May to support the yen, but the impact of that intervention has weakened.
The euro slipped 0.26% to $1.1398 amid softer inflation data from parts of Europe, while sterling eased 0.2% to $1.3234. Commodity-linked currencies also faced pressure as oil and gas prices declined, with the Australian dollar touching a three-month low and the Canadian dollar hovering near recent lows, it added.
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