Story
Yen Hovers Near 40-Year Low, Testing Japan's Intervention Stance
Summary
The Japanese yen weakened on Tuesday, trading near a multi-decade low against the U.S. dollar as traders test the resolve of Japanese authorities to intervene. The currency's decline comes amid speculation about Tokyo's strategy and a broader weakening of the U.S. dollar.
The Japanese yen continued its decline in early Asian trading on Tuesday, hovering on the weaker side of 162 per dollar and approaching a nearly 40-year low. The currency's slide is seen as a test of the Japanese government's willingness to intervene in the market, though the persistent threat of such action has reportedly kept losses in check.
Traders have grown more confident in pushing the yen lower after Japanese authorities did not intervene to support the currency during the recent U.S. holiday, a period of lower market liquidity. According to Lee Hardman, senior currency analyst at MUFG, speculation that Japan might act during that time did not materialize, which contributed to the yen's recent losses.
The yen's weakness was also evident against other major currencies. It languished near its lowest level since 2007 against the British pound, at 217.09, and traded at 185.47 against the euro after the European currency rose 0.5% in the previous session.
AdIn the broader currency market, the U.S. dollar remained on uncertain 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 for the year. Market participants are now awaiting the minutes from the Federal Open Market Committee's (FOMC) June meeting for further insight into the U.S. rate outlook.