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Yen gives back nearly half of intervention-led dollar rally gains
The yen traded around 158.45 per dollar on Friday morning after moving as low as 155.23 on Monday, with traders watching the interest-rate outlook as the main driver again.
The Japanese yen has reversed much of its rebound tied to joint US and Japan intervention, giving back nearly half of the gains as the currency moved to about 158.45 per dollar on Friday morning, down from a strong point near 155.23 reached on Monday, according to LiveMint Markets.
The yen had been around a four-decade low near 164 per dollar last week before Japan and the US carried out their first joint yen-buying operation since 1998, but the pullback has highlighted the limits of intervention in reversing the yen’s longer-term decline.
The article notes persistent pressure from a wide interest-rate gap versus the US, Japan’s high debt load, and ongoing geopolitical uncertainty. In parallel, the dollar posted its biggest daily gain in two weeks on Thursday as oil prices rose and optimism faded that Middle East tensions would ease.
Japanese officials have warned they intend to keep defending the yen if needed, and one strategist said the odds of another intervention are high as dollar-yen approaches 160. Still, the piece says intervention’s effectiveness likely depends on faster Bank of Japan rate hikes, with overnight index swaps implying about a 60% chance of a BOJ hike by September.