Yen Steadies but Remains Vulnerable After Intervention Fades

The Japanese yen steadied on Tuesday after a sharp drop in the previous session as joint US-Japan intervention failed to deliver lasting support. The yen firmed to 158.93 per US dollar, but remains further away from its three-month high of 155.20 hit last week.

The rare US-Japan intervention at the end of July aimed to prop up the yen after it reached a 40-year low of 163.99 per dollar. However, the yen has since erased nearly half of the gains, leaving traders speculating that authorities will return to the currency market.

Speculators slashed their bearish bets on the Japanese yen by the most in over 12 years, with net short positions falling by $8.865 billion to $3.604 billion in the week to Aug 4. Analysts suspect that speculators will rebuild their short positions, making the path ahead for the yen 'choppy'.