Yen's Slide Continues Amid Ongoing Global Economic Uncertainty

The yen has been under pressure despite a joint intervention by Japan and the US in July and August, where they spent around $89 billion and $5-$10 billion respectively to support the currency.

Initially, the yen strengthened from 164 to 156 against the dollar, but two weeks later, USD/JPY is back near 160.

The reason behind this is that the intervention did not address the underlying problems, including a huge rate gap between the US and Japan, which keeps the carry trade attractive as investors borrow yen to buy higher-yielding US assets.

The problem is further compounded by elevated oil prices, with gasoline still above $4 a gallon, up more than 30% since the US and Israel launched the war, raising the risk of another inflation wave.