Yen Sinks Below 159 Amid Fears of Accelerating Inflation

The Japanese yen has lost half of its gains from a recent intervention-driven rally, plummeting past 159 per dollar on Tuesday. This decline is a test for both Tokyo and Washington to support the currency.

In July, Japan and the US carried out a record coordinated yen-buying operation when the currency hit 40-year lows, raising concerns about global economic stability. However, markets were disappointed by the lack of additional measures following this intervention.

The yen remains under pressure from long-term fundamentals, including wide interest rate differentials and mounting fiscal concerns. Additionally, elevated energy and import costs continue to weigh on the currency.