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The Japanese yen remained under pressure on Wednesday, hovering close to the critical 160-per-dollar level, a threshold closely watched by global currency markets and Japanese policymakers. The USD/JPY exchange rate traded around 159.9 yen per dollar during European trading hours after briefly touching the 160 mark earlier in the day.
The 160 level has become a significant psychological barrier for investors, as it previously triggered currency intervention by Japanese authorities in April. Market participants remain alert to the possibility of another intervention if the yen continues to weaken against the U.S. dollar.
The Japanese currency has faced renewed selling pressure amid expectations that U.S. interest rates will stay elevated for a longer period. Stronger-than-expected U.S. economic data has reinforced this outlook, supporting the dollar and widening the interest-rate gap between the United States and Japan. Additionally, rising oil prices linked to tensions in the Gulf region have increased concerns for Japan, which relies heavily on imported energy.
Analysts at MUFG noted that Japan’s Ministry of Finance could increase verbal warnings and potentially intervene again if the yen moves further beyond key levels. Japanese Finance Minister Satsuki Katayama echoed those concerns, stating that authorities are prepared to take appropriate action against excessive currency fluctuations.
Since April, Tokyo has reportedly spent a record 11.7 trillion yen, equivalent to approximately $73 billion, to support the currency. However, the impact of those measures has been limited, as the underlying interest-rate differential continues to favor the U.S. dollar.
Investors are now focusing on upcoming comments from Bank of Japan Governor Kazuo Ueda and the central bank’s June policy meeting. Market expectations are growing that the BOJ could introduce another interest-rate hike to combat inflation and help stabilize the yen.
According to MUFG analysts, a meaningful reversal in the USD/JPY trend may require additional monetary tightening from the Bank of Japan. Until then, the yen is likely to remain vulnerable, keeping intervention risks firmly in focus for forex traders and investors.
