Japan, U.S. Steady Yen at 159 After Intervention as Traders Eye 160 Test
Updated
Updated · Real Economy Blog · Aug 17
Japan, U.S. Steady Yen at 159 After Intervention as Traders Eye 160 Test
3 articles · Updated · Real Economy Blog · Aug 17
Summary
The yen stood at 159 per dollar on Friday after late-July intervention by Japan’s Finance Ministry and the U.S. Treasury briefly lifted it from 163 to 157.
An 80% market-implied chance of a Bank of Japan rate hike on Sept. 17-18 now underpins the currency, but analysts say speculators will still probe 160 without broader policy shifts.
Japan’s Treasury holdings fell 8% from $1.239 trillion in February to $1.143 trillion in May, feeding concern that yen support could worsen a U.S. bond selloff by reducing demand for Treasuries.
U.S. yields were already elevated, with 2-year notes near 4.17%, 10-year yields testing 4.7% and 30-year yields at 5.25%—the highest since 2002.
The report argues coordinated intervention can slow disorderly moves, but lasting support for the yen will depend on BOJ tightening, stronger Japanese growth and whether markets tolerate U.S. debt above 120% of GDP.