NEW YORK — The Japanese yen traded at 159.20 against the U.S. dollar in Asian hours, down 0.9 percent since Monday and well below its 155.20 three-month high reached last week.
The United States and Japan conducted a joint yen-buying intervention in late July, after the yen fell to 163.99 per dollar—a 40-year low. The currency has since reversed nearly half of those gains.
Analysts point to unchanged interest rate differentials as the primary reason for the intervention's limited staying power. Kieran Williams, head of Asia FX at Intouch Capital Markets, said the dollar-yen reversal was expected given that no corresponding shift in rate policy accompanied the intervention.
Speculators sharply reduced their bearish yen bets in the week ending Aug. 4, with net short positions falling $8.865 billion to $3.604 billion, according to U.S. regulatory data—the largest single-week reduction in more than 12 years.
Despite that reduction, market participants expect speculators to rebuild short positions, a dynamic complicated by the Bank of Japan's policy trajectory. Traders price just over a 50 percent chance of a BOJ rate hike, according to LSEG data.
Shusuke Yamada, head of Japan FX and rates research at Bank of America, said he is constructive on the yen and revised his year-end forecast to 149 from 152. He said coordinated intervention could accelerate BOJ rate increases, supporting the currency over a longer horizon.
The BOJ's path to tighter policy faces political pressure to support the domestic bond market, which could constrain how aggressively the central bank moves and limit yen appreciation.
Separately, the Reserve Bank of Australia held its key cash rate at 4.35 percent, in line with market expectations, but cautioned that further rate increases may be necessary. The RBA has raised rates by 75 basis points since February to contain persistent inflationary pressures, particularly from surging energy costs.
The Australian dollar held steady at $0.7054 following the announcement, near its strongest level since mid-June.
