Yen's Slide Sparks Fresh Speculation on Rate Hikes and Intervention

The yen's recent decline is putting pressure on traders to predict whether another round of official intervention will be needed or if rate hikes are imminent. The currency has lost roughly half its gains from late July and early August, falling about 0.9% this week to 159.29 per dollar.

Markets see the 160 level as a potential trigger for fresh official action. Traders are wagering on either rate hikes or another round of intervention to stem the yen's decline, which mirrors a similar selloff in May when it was backsliding after a round of official buying.

The Japanese currency has been falling for years, and is not far from four-decade lows, thanks to a combination of perennially low interest rates and newer confidence concerns around government spending.

Reports suggest the Bank of Japan is set to raise rates as soon as September and may consider more aggressive hikes to follow. This news caused the yen to rise slightly in Friday trade, but traders are still unsure what action will be taken next.