Yen Slides to New Lows as Dollar Gains Ground

The yen is on track to suffer its biggest weekly decline since May, despite Japan's verbal efforts to support the currency. The yen has fallen to new 40-year lows against the dollar, and some analysts believe even intervention would only provide policymakers with extra time.

Unless the Bank of Japan raises interest rates more quickly, the structural forces weighing on the currency are likely to remain in place, according to analysts. This view is supported by the U.S. Treasury Department's warning that excessive currency volatility is undesirable.

The yen's weakness has left the dollar poised for a weekly gain of 0.89%, which would be its biggest rise since May. Christian Antunez, global fixed income and FX associate at Lazard Asset Management, said 'We expect the yen to weaken over the medium term. Intervention is fighting a fundamentals-driven move and will continue to buy time, not direction.'