Yen Weakness Tests Intervention Line Again as BOJ Rate Hike Looms

The Japanese yen's weakness continues despite two Bank of Japan interventions this year. The USDJPY traded around 159.3 to 159.4 on August 14, with speculators selling in the absence of follow-up intervention from Tokyo.

Prime Minister Sanae Takaichi's government is now supportive of a near-term Bank of Japan rate hike, with policymakers likely to act in either September or October.

The core tension remains: a wide gap between the Fed funds rate (3.50% to 3.75%) and the BOJ policy rate (0.75%), leaving room for carry trade flows even as Takaichi's government pushes for a hike.