Yen Breaks Past 160 as Fed Tightening Expectations Weaken Currency
The yen has broken past its closely watched level of 160 against the dollar for the first time since Japan and the US jointly intervened in a record $98.7 billion effort to prop it up.
This underscores how limited the impact of that intervention has been, as renewed expectations of Federal Reserve tightening have dimmed hopes that US-Japan interest rate differentials would narrow in favor of the yen.
Fed Chairman Kevin Warsh's comments at the Jackson Hole economic symposium on the need for confidence in underlying inflation have lifted Treasury yields and the dollar, pulling Japanese government bond yields higher in turn. The 10-year JGB yield rose to a fresh 30-year high of 2.95 percent.
US Treasury Secretary Scott Bessent described the yen's moves as 'pretty well contained' but Nomura Research Institute's Takahide Kiuchi, a former Bank of Japan policy board member, thinks Bessent may use the upcoming G20 gathering to press Japan on fiscal discipline and further BOJ rate hikes in exchange for coordinated intervention support.