NEW YORK: The dollar was headed for a second straight day of losses against the yen on Friday after Japan was reported to have intervened to support its currency.
Markets remained on edge after Japan’s top currency diplomat, Atsushi Mimura, said speculative positions were still evident, underscoring authorities’ unease over rapid yen moves.
The dollar briefly slid from around 157.1 to 155.49 against the yen before recouping some losses after Mimura’s remarks. It was last flat at 156.62.
Two sources familiar with the matter told Reuters that officials had intervened to buy the yen on Thursday after it hit 160.7 per dollar, its weakest since July 2024.
“The durability of intervention remains uncertain,” said Uto Shinohara, senior investment strategist, Mesirow Currency Management in Chicago.
“Historically, its effects tend to fade without accompanying policy shifts, rate hikes or coordination.”
Bank of Japan data released on Friday suggested authorities may have spent up to 5.48 trillion yen (USD35 billion) during the operation, just below the USD36.8 billion deployed in July 2024.
The yen has been under sustained pressure from wide US-Japan interest rate differentials. Its weakness has been compounded by higher oil prices linked to the Iran war, which have supported the dollar.
The dollar was on track for its steepest weekly decline against the yen since early February, down about 1.7 percent.
The European Central Bank and the Bank of England held interest rates steady on Thursday, in line with expectations, following earlier pauses by the Federal Reserve and the Bank of Japan.
However, both the ECB and BOJ signalled they could begin raising rates as soon as June to curb inflationary pressure stemming from higher imported energy costs.
The euro rose 0.32 percent to USD1.177, heading for a second consecutive weekly gain. Sterling was last up 0.25 percent at USD1.1364 and was poised for a fifth straight week of advances.
The dollar was last down 0.27 percent to 0.779 against the Swiss franc and was set for its second week of losses.
“While markets are pricing roughly a two-thirds chance of a June hike from the BOJ, expectations for Fed cuts have largely evaporated,” Shinohara said. “That divergence, alongside a more hawkish Fed, limits the scope for sustained yen appreciation.”
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