Overview
- The yen traded near ¥162 per dollar on Tuesday, marking its weakest level versus the dollar since 1986 and renewing pressure on Japanese authorities to respond.
- Finance Minister Satsuki Katayama and other officials said they are prepared to take appropriate action, stopping short of immediate strong warnings but keeping the door open to intervention.
- Tokyo already ran a record intervention campaign between late April and late May, spending about ¥11.73 trillion to buy yen, but that effort only produced a short-lived stabilisation.
- Policy moves have been limited in effect because the Bank of Japan recently raised its benchmark rate to 1.00% while U.S. rate expectations remain higher, sustaining a wide yield gap that favours the dollar.
- Speculators have rebuilt large net short positions and traders are watching near-term U.S. data such as the June jobs report for a possible trigger that could force further intervention or prompt volatile carry-trade flows.