The yen slumped to levels not seen since 1986 on Tuesday, stoking worries that direct intervention from Tokyo was around the corner, while the dollar backed away from 13-month highs ahead of jobs data that could influence the US rate outlook.The yen weakened to 162.41 per dollar for the first time in 40 years on Tuesday. Japanese Finance Minister Satsuki Katayama reiterated the authorities stood ready to respond appropriately at any time, refraining from stronger rhetoric.
The Japanese currency was set for a 2 percent drop in the second quarter, its fourth straight quarter of decline, its longest such streak since 2022, when it fell for seven consecutive quarters, as a wide interest rate gap drags on the yen.
"It's a question of when, not if, the Ministry of Finance (MOF) intervenes again to support the yen," said Carol Kong, currency strategist at Commonwealth Bank of Australia.
"However, any intervention is unlikely to reverse the broader uptrend in USD/JPY," said Kong, who expects the yen to hit 164 per US dollar by early 2027.
Yen's fight against the tide
