The yen weakened past the key 160-per-dollar level as it extends a slide that's erased more than half of its intervention-fueled gains.
The Japanese currency slipped as much as 0.4% to 160.01 versus the greenback after the dollar got a boost from Federal Reserve Chairman Kevin Warsh's vow to hit the central bank's inflation target. Traders now are carefully watching yen levels for signs of when authorities might move to protect the currency.
The yen has been under pressure since failing to push through 155 earlier this month in the wake of joint action on July 31, when the US and Japan conducted their first coordinated yen-buying intervention since 1998.
The latest bout of yen weakness emerges even after US Treasury Secretary Scott Bessent made a fresh attempt to rein in long-term US borrowing costs from multi-year highs.
Photo Credit: Bloomberg
The greenback recovered this week as Warsh warned that inflation isn't slowing meaningfully, boosting bets on interest-rate hikes. Investors are concerned over the wide rate gap between Japan and other economies, the nation's heavy debt burden and the impact of recent gains in oil prices, which have reverberated globally.
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“160s is no longer a valuation level. It's becoming a policy level. Washington and Tokyo have effectively put a political line in the sand in the mid-160s,” said Masahiko Loo, senior fixed-income strategist at State Street Investment Management. “We would not rule out another round of intervention before a potential Bank of Japan hike, as early as September.”
Prime Minister Sanae Takaichi's government is said to be supportive of a near-term Bank of Japan rate hike given the yen weakness. The yen had been near a four-decade low of around 164 per dollar before a bout of intervention in the last days of July that saw the US join Japan in defense of the currency. Back in the summer of 2024, authorities also intervened to support the yen when it crossed the 160-per-dollar level.
Hedge funds have more than halved their bearish bets against the yen since the coordinated intervention, but some investors are starting to return to carry trades funded by the currency, according to market watchers.
(This story has not been edited by NDTV staff and is auto-generated from a syndicated feed.)
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