Yen Stabilizes as Dollar Hits Six-Week Lows Amid Revived Iran Hopes
The Japanese yen stabilized on Wednesday after its most volatile few days in months following historic intervention by Tokyo and Washington. The dollar traded around six-week lows against other currencies as revived hopes of an end to the war in Iran reduced safe-haven demand.
The yen was steady at 157.55 per dollar, slightly stronger on the day, after falling 0.4% on Tuesday. This followed a sharp decline from its weakest level in 40 years, around 164 per dollar a week earlier.
US Treasury Secretary Scott Bessent echoed former European Central Bank President Mario Draghi by saying 'whatever it takes' to support Japan's efforts to stabilize the yen. CIBC Capital Markets head of G10 FX strategy Jeremy Stretch noted that intervention is unlikely to be effective unless there are more aggressive rate hikes from the Bank of Japan, lower oil prices, and reduced expectations of future Federal Reserve rate increases.
The dollar index, which tracks the US currency against six others, was 0.1% lower at 99.71 after hitting a six-week low on Monday. Lower oil prices prompted traders to attach a lower chance of the Federal Reserve raising interest rates in September, further reducing demand for the dollar.