FX.co ★ Yen Weakness Stokes Intervention Fears

The Japanese yen weakened to around 160.6 per dollar on Thursday, its lowest level since July 2024, intensifying speculation that authorities may once again step in to support the currency. The yen has now surrendered all the gains it made on April 30, when Tokyo conducted a record-sized intervention to stabilize the exchange rate.

The latest slide occurred despite the Bank of Japan’s ongoing, gradual tightening of monetary policy, including a 25-basis-point rate hike to 1% earlier this week aimed at countering an energy-driven inflation shock stemming from the conflict in the Middle East. The yen remained under pressure as the dollar strengthened following the US Federal Reserve’s decision to leave interest rates unchanged while signaling increasing support for potential rate hikes later this year.

At the same time, President Donald Trump signed an interim agreement to end the war with Iran and reopen the Strait of Hormuz, easing concerns about Japan’s energy security and broader economic outlook, given the country’s heavy reliance on energy imports from the Middle East.