Story
Japanese Yen Nears 40-Year Low as Traders Watch for Intervention
Summary
The Japanese yen weakened to levels near a four-decade low against the U.S. dollar, as currency traders test the resolve of Japanese authorities to intervene. The currency's decline continues amid speculation over potential official action to support its value.
The Japanese yen has depreciated again, trading on the weaker side of 162 per U.S. dollar in early Asian trading on Tuesday. The currency is also struggling against other major currencies, languishing near its lowest point against the British pound since 2007 at 217.09 and trading at 185.47 against the euro.
The yen's slide has been attributed to traders feeling more confident in pushing the currency lower in the absence of direct intervention from Japanese authorities. According to Lee Hardman, a senior currency analyst at MUFG, speculation that Japan might intervene during the recent U.S. holiday period, when trading is typically less liquid, did not materialize, contributing to the yen's renewed weakness.
While the risk of a surprise yen-buying move by Tokyo is reportedly keeping losses in check, the market continues to test the government's threshold for action. Late last week, the yen saw a sudden jump, but traders noted it was not indicative of official intervention, leaving the market to watch for more definitive signals.
AdIn the broader currency market, the U.S. dollar has been on weaker footing. This follows a recent U.S. jobs report that came in below expectations, leading investors to scale back their bets on Federal Reserve rate hikes this year. Market focus is now turning to the minutes from the Federal Open Market Committee’s (FOMC) June meeting, which will be released on Wednesday, for further clues on the U.S. interest rate outlook.