FX.co ★ Yen Heads for Weekly Drop

The Japanese yen traded around 159.4 per dollar on Friday and was on course to lose about 1% for the week, as the lack of follow-up intervention by authorities emboldened speculators to continue betting against the currency. The yen has now surrendered roughly half of the gains achieved in late July and early August, when Tokyo and Washington undertook record-sized joint intervention. It remains under pressure from structural factors, including wide interest rate differentials, mounting fiscal concerns, and elevated energy and import costs. At the same time, markets are speculating about a possible Bank of Japan rate hike in September or October amid worries that a weaker yen could stoke inflation. US Treasury Secretary Scott Bessent also stated that Japan should complement currency intervention with policies and economic fundamentals that underpin the yen.