Aussie-Yen Eyes Three-Decade High as RBA Hawkishness Outweighs Tokyo Intervention

The Australian dollar is poised to climb back towards its three-decade high against the yen as Tokyo's currency intervention fades and the Reserve Bank of Australia maintains a hawkish stance. Analysts say the Aussie-Yen exchange rate has already recovered from the dip caused by Japanese intervention, which saw it drop over 4% towards the 109 level.

According to Mahjabeen Zaman, head of FX research at ANZ Group Holdings Ltd., much of the shift on the yen leg is done and further Japanese intervention is unlikely. She expects the RBA to remain hawkish amid geopolitical and energy price uncertainties, which will keep the Aussie resilient.

Derivatives markets are also showing a shift in sentiment, with the premium to hedge against a drop in Aussie-Yen over the next month declining rapidly last week. AT Global Markets Australia is predicting a return of the currency pair towards its late-July levels, while Chief Market Analyst Nick Twidale points to rate spreads as a key driver behind the prior rally.

However, not everyone agrees that the RBA's stance can sustain a prolonged rally. Commonwealth Bank of Australia FX strategist Samara Hammoud cautions that Aussie-Yen has limited room to run once the recent dip unwinds and expects the cross to slide towards 108 by the end of this quarter.