Yen's Strength Draws Attention to US-Japan Intervention and BOJ Rate Hike Odds

The Japanese yen has strengthened again, nearing its previous high of 160 per dollar, which is prompting market attention to potential additional joint intervention by the US and Japan.

Analysts note that foreign-exchange intervention alone may not be enough to sustain yen strength due to the wide interest-rate gap between the two countries, with the Federal Reserve's benchmark rate at 3.50% to 3.75%, while Japan's policy rate stands at 1%.

A key factor in determining the yen's direction is seen as another rate hike by the Bank of Japan, with derivatives markets pricing in roughly a 60% chance of a BOJ rate hike in September and an October increase already largely reflected in prices.