Yen Heads for Biggest Weekly Drop Since May Amid Dollar Strength

The yen is on track for its biggest weekly decline since May, despite Japan's verbal efforts to support the currency. The yen has fallen to new 40-year lows versus the dollar, with some analysts believing that even intervention would only provide policymakers with temporary relief.

According to Christian Antunez, global fixed income and FX associate at Lazard Asset Management, 'intervention is fighting a fundamentals-driven move and will continue to buy time, not direction.' The yen's weakness has led to the US dollar poised for a weekly gain of 0.89%, its biggest rise since May.

The strengthening dollar has been driven by benign inflation data in the US, but concerns about higher energy costs have revived worries about price pressures. Oil prices topped $100 a barrel this week for the first time in nearly two months, while Federal Reserve Chair Kevin Warsh has repeated his commitment to bringing inflation down to its 2% target.