Yen Hits Fresh 40-Year Low Versus Dollar; Traders Alert for Possible FX Intervention

Key Points:

• The Japanese yen hit a 40-year low against the US dollar, reaching an intraday level of 162.77 yen per dollar, raising concerns about potential government intervention to stabilize the currency.
• The yen's weakness is driven by expectations of gradual interest-rate hikes by the Bank of Japan, contrasted with anticipated Federal Reserve rate increases, which strengthen the dollar.
• Japan's Finance Minister Satsuki Katayama reiterated the government's readiness to act against excessive yen volatility, including possible currency intervention agreed upon during recent talks with US officials.
• Despite Japan spending a record $72.47 billion on currency intervention in the past month, the yen's decline has resumed amid improved global risk sentiment and easing Middle East tensions.
• Japan's substantial foreign-exchange reserves of $1.09 trillion provide the government with significant capacity for further intervention to support the yen in the near term.