Yen Weakens Beyond 160 Per Dollar as Traders Eye Fresh Intervention

The yen has broken through the 160 per dollar barrier again, prompting traders to watch for signs of fresh intervention from Japanese authorities.

Despite a record $96.4 billion spent by Japan to defend the yen in late July and early August, much of its post-intervention gains have been erased, leaving markets concerned that any new intervention may be less effective.

In the swaps market, traders are pricing in about a 90% chance of a Bank of Japan rate hike on September 18, which could further weaken the yen and drive speculative flows.

Rinto Maruyama, senior rates and foreign-exchange strategist at SMBC Nikko Securities, warns that markets should be watching for the 161 per dollar level as a key threshold for intervention. If the yen declines to this level, attention would then turn to the 162 to 163 range where authorities intervened last time.

Markets are also pricing in another Bank of Japan rate hike, with traders assigning about a 90% chance to a benchmark rate increase at the BOJ's September 18 monetary policy meeting. By October 30, a hike is fully priced in.