Yen Heads for Biggest Weekly Loss Since May Amid Fading Intervention

The yen is headed for its biggest weekly loss in three months as the impact of US and Japanese intervention fades. The currency has surrendered roughly half the gains sparked by intervention in late July and early August, falling about 1 per cent this week to 159.43 per dollar.

This fall marks the yen's largest weekly drop since May, when it was also backsliding after a round of official buying. A fall of about 0.8 per cent to 183.91 yen per euro this week is the largest since April.

The Japanese currency has been weighed down by perennially low interest rates and growing concerns over government spending and funding, leaving it near four-decade lows before the intervention. To stem further falls, Japan may conduct more joint yen intervention 'at any time' and signal the chance of faster-than-expected interest rate hikes.

Markets have already bet on the Bank of Japan raising rates further and sooner than previously expected after US Treasury Secretary Scott Bessent said Japan should reinforce currency intervention with policies and fundamentals that underpin the yen. Markets currently see a 76 per cent chance of a BOJ hike in September, according to Tokyo Tanshi data.