The Japanese yen is testing the 160 barrier on Friday, prompting pushback from Japanese officials, while the US dollar is on track for a weekly gain as Gulf tensions fuel safe-haven flows.The yen weakened to the critical 160-per-dollar mark briefly in early trades, hitting the level for the third straight session despite verbal warnings from authorities. The 160 level is widely seen in markets as a line in the sand for potential official intervention.
Japan is ready to respond appropriately at any time on foreign exchange and reserves the right to take "decisive action" against excessive volatility, Finance Minister Satsuki Katayama said on Friday.
The yen is now set for the fourth straight week of decline, a streak not seen since February, mostly wiping out the gains driven by intervention over the past month at a cost of $73 billion.
"The critical question remains whether officials are willing to resume their battle against formidable macro headwinds" including elevated energy prices, robust US data, and higher yields, wrote Tony Sycamore, market analyst at IG.
Previous intervention efforts in late April delivered only a fleeting impact, he said, and the dollar would need to sustainably weaken below 155 to inflict any meaningful damage on the prevailing uptrend.
