Yen’s Weekly Decline Raises Fears of Fresh Currency Intervention

The Japanese yen is heading for its biggest weekly decline in about a month as the impact of recent currency-market intervention by Japan and the United States fades.

Traders are increasingly watching for either higher interest rates from the Bank of Japan (BOJ) or another round of government intervention to support the currency.

The yen has lost about 0.9% against the US dollar this week, trading around 159.29 yen per dollar.

The currency has given back roughly half of the gains recorded after official intervention in late July and early August.

The yen had previously fallen to around 164 per dollar, its weakest level in about 40 years, before the intervention. With the currency now approaching the 160 level, traders believe it could become a possible trigger for another official response.

Analysts say intervention alone may not be enough to reverse the yen’s broader downward trend.

They argue that stronger signals from the BOJ, particularly a more aggressive approach to raising interest rates, could be necessary to provide lasting support for the currency.

The yen gained slightly on Friday following a Reuters report that the BOJ could raise interest rates as early as September and may consider larger increases later.

The central bank has raised rates roughly twice a year since ending its decade-long monetary stimulus programme in 2024.

Meanwhile, the wider currency market remained relatively stable. The US dollar received some support from investment flows into US technology stocks, higher oil prices and tensions in the Middle East.

However, weaker-than-expected signals from US employment and inflation data have reduced expectations of another US interest-rate increase.

The euro rose about 0.2% to $1.1552, while the British pound gained 0.2% to $1.3516. The pound was also supported by stronger-than-expected UK economic growth data.

Analysts said the dollar could continue receiving support from strong demand for US equities, particularly companies linked to artificial intelligence, even as expectations for higher US interest rates weaken.

The Swiss franc also declined against the euro, while the New Zealand dollar recovered from losses triggered by unexpectedly weak inflation expectations.

Investors continue to watch central-bank decisions closely as markets assess the direction of global interest rates and currencies.

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