Yen's Slide Prompts Bets for Another Round of Intervention

The yen has been on a downward trend, losing about half of its gains from late July and early August after intervention efforts. As a result, traders are speculating that another round of official buying may be needed to stabilize the currency.

According to Reuters, the yen has fallen around 1% this week to 159.43 per dollar, with some analysts seeing the 160 level as a potential trigger for fresh intervention. This would mark its biggest weekly loss since May, when it was also backsliding after a round of official buying.

Despite a combination of low interest rates and government spending concerns contributing to the yen's decline, Japan may conduct more joint yen intervention 'at any time' and signal faster-than-expected interest rate hikes to stem further falls. Markets have already bet on the Bank of Japan raising rates further and sooner than previously expected.

Markets currently see a 76% chance of a BOJ hike in September, according to Tokyo Tanshi data, but one which also opens the door to yen falls if investors are disappointed.