Dollar-Yen Climbs Toward 160 as Markets Test Japan's Resolve

The dollar-yen exchange rate has been climbing towards the psychologically important 160 level as markets reassess Japan's resolve to support its currency.

On Wednesday, the pair was near 159.43, with the yen close to its weakest levels since the latest intervention-driven rebound in July.

The dollar's strength is attributed to renewed geopolitical tensions and higher oil prices, which are supporting demand for the dollar as a safe-haven asset.

The interest-rate gap between the US and Japan remains a major problem, with Japanese interest rates well below US rates, creating an incentive for investors to borrow or hold yen while investing in higher-yielding assets elsewhere.