Yen Weakened After Tokyo and Seoul Intervention Ahead of BOJ Decision

The Japanese yen weakened after intervention by Tokyo and South Korea, which propped up the currency ahead of a Bank of Japan policy decision. The dollar rose as much as 0.8% to 160.690 in early trades.

Marcets tested Tokyo's resolve following the coordinated intervention. Speculators had amassed large bearish bets on the yen, with weekly data showing net short positions worth $11.65 billion, near the highest in two years.

The BOJ is expected to keep short-term interest rates steady at 1%, but most analysts polled by Reuters expect a rate hike to 1.25% by year-end. This could push the dollar/yen pair higher again.