Dollar-Yen Tests Japan's Resolve as Yen Weakens Toward 160

The dollar-yen exchange rate has climbed back toward the psychologically important 160 level as markets reassess Japan's resolve to support its currency. The pair was near 159.43, putting the yen at its weakest levels since the latest intervention-driven rebound.

This significant reversal follows a sharp appreciation that occurred after coordinated action by Japanese and U.S. authorities. In July, the dollar-yen pair fell by roughly 5% from its earlier highs due to an intervention-driven reversal.

The move has revived questions about how far the yen can weaken before Tokyo decides another intervention is necessary. The interest-rate gap remains a major problem for Japan, with higher U.S. interest rates making dollar-denominated assets more attractive to investors.