Limited US role in Japan intervention undermines deterrent as yen touches 160
TLT•The yen weakened past 160 per dollar for the first time since early September. A New York Fed report showed the US sold about $497 million of euros to buy yen during Japan’s intervention, below a previously cited potential US contribution of $10 billion.
1. Yen weakens past 160
The yen weakened past 160 per dollar overnight, prompting renewed warnings from Japanese Finance Minister Satsuki Katayama that Tokyo stood ready to act again. Japan spent 15.4 trillion yen ($96.5 billion) to support the currency in July and August, after it fell to a four-decade low of 163.99 per dollar.
2. US intervention totaled $497 million
A New York Fed report showed the US sold about $497 million of euros to buy yen during the intervention. Treasury Secretary Scott Bessent had hinted that US action could reach $10 billion. Analysts said the relatively modest contribution could weaken the deterrent effect of future joint action, while confirming Washington was willing to back Tokyo.
3. Dollar strength pressures yen
The yen’s weakness has raised import costs and added pressure on the Bank of Japan to tighten policy, but a broad dollar rally has recently outweighed those pressures. US Treasury yields rose as markets increased bets on a larger Federal Reserve rate hike next month. Analysts said a move above 160.30 could bring 160.39 into focus, with 164 a possible next level; they also said Japan could still intervene on a large scale.
