FX.co ★ Yen Remains on Intervention Watch

The Japanese yen traded around 158.5 per dollar on Friday, hovering near a two-week low and approaching the closely watched 160 level that could test Tokyo’s tolerance for further currency weakness. The yen remained under pressure from a stronger US dollar and rising US Treasury yields, as markets increasingly expect the Federal Reserve to tighten policy further to rein in inflation.

Additional downward pressure came from perceptions that last week’s Bank of Japan rate hike was not sufficiently hawkish, particularly as two board members dissented. At the same time, former BOJ board member Makoto Sakurai said the central bank is likely to raise interest rates roughly once every three months, potentially bringing them to around 2% by June next year as it works to address growing inflationary pressures.