Yen Holds Steady Near 160 Amid Rising Expectations of BOJ Rate Hike

The Japanese yen held steady near 160 per dollar on Tuesday after U.S. Treasury Secretary Scott Bessent's comments suggesting that Japan's government and central bank would take action to strengthen the currency.

Bessent's remarks, made during a Group of 20 finance leaders' gathering, were seen as a rare intervention from the U.S., which had previously provided short-lived relief for the fragile yen in July. However, analysts believe that there needs to be stronger follow-through by the Bank of Japan (BOJ) for the currency to sustainably move away from 160.

Markets are pricing in a 73% chance of a hike from the BOJ later this month, but analysts suggest that a more hawkish path beyond September is necessary. The U.S. dollar was subdued on Tuesday, backing away from Friday's gains as investors contended with rising odds of a hike from the Federal Reserve (Fed) in September.

Oil prices surged above $91 per barrel after the first exchange of direct attacks between the U.S. and Iran in over a month, stoking inflation concerns and adding pressure on the Fed to raise interest rates. The 10-year Japanese government bond yield touched 3% for the first time in 30 years.