FX.co ★ Yen Steadies

The Japanese yen hovered around 163 per US dollar after touching a four-decade low of 163.24 earlier this week, as traders weighed the likelihood of official intervention and the prospect of faster interest rate hikes by the Bank of Japan. Sentiment toward the currency has deteriorated in recent weeks as investors respond to a shifting policy landscape under Prime Minister Sanae Takaichi, whose administration has struggled to dispel concerns that it might pressure the BOJ to postpone monetary tightening. Rising tensions in the Middle East have also pushed oil prices sharply higher, intensifying the strain on Japan’s import-dependent economy. Japanese Finance Minister Satsuki Katayama reiterated that the government stands ready to take decisive action in the foreign exchange market if needed. However, such assurances have so far done little to stem the yen’s broader decline, given the dollar’s strength and Japan’s comparatively low interest rates.