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Yen slips against the dollar as intervention boost fades

The yen has weakened about 0.5% versus the dollar in August after earlier gains following softer US payroll data, traders now watch for whether Japan and the US step in again.

Reported · Written up by our desk · Major Pairs

The yen is underperforming all Group-of-10 peers this month as the initial lift from recent yen-buying intervention fades, according to LiveMint Markets, citing Bloomberg. The currency is down about 0.5% against the dollar in August, after reversing part of a 3.2% gain in July.

After Japan and the US carried out their first coordinated yen-buying intervention since 1998 near the start of the month, the yen briefly strengthened to around 155 per dollar, before the move largely unwound. The yen is now trading weaker than 158 per dollar, after having slid to a roughly four-decade low near 164 earlier.

Traders are also watching the timing of potential action, with Japan observing a holiday on Tuesday that could leave markets with thinner liquidity and create conditions for another bout of intervention. Strategists at Nomura noted that the Obon holiday period could limit participation as attention stays on the intervention stance of Japanese and US authorities.

Despite warnings that officials are prepared to act again, the article says yen weakness is likely to persist because broader headwinds remain, including concerns Japan could increase fiscal spending. Goldman Sachs strategists said the intervention impact has been muted relative to the underlying reasons for the currency decline, and they expect depreciation pressures to reemerge unless global conditions shift or policy surprises occur.

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