FX.co ★ Yen Sinks Further as Intervention Talks Mount

The Japanese yen weakened beyond 162.5 per dollar on Wednesday, its lowest level in roughly forty years, intensifying speculation that authorities may step in to support the currency. Traders are eyeing Friday’s US market holiday as a possible window for Tokyo to intervene by purchasing yen, since reduced liquidity could magnify the effect of any such move. The currency came under renewed pressure after fresh data underscored the resilience of the US economy, bolstering expectations that the Federal Reserve will raise interest rates this year. At the same time, investors remain doubtful that the Bank of Japan will hasten the pace of policy tightening, as it sticks to a gradual normalization strategy. Ongoing carry trades and persistent safe-haven demand for the US dollar have further weighed on the yen. Japan’s heavy dependence on oil imports from the Middle East also leaves its economy exposed to potential disruptions in regional energy supplies.