Yen Gives Back Half Its Intervention-Driven Gains

The Story in Brief

The yen weakened to around 158.45 per dollar on Friday, surrendering nearly half its gains after a joint US-Japan currency intervention. It had strengthened to 155.23 on Monday, after trading near a four-decade low of about 164 last week. The operation was the first joint yen-buying action by Japan and the US since 1998.

Officials have warned they may intervene again, particularly if the dollar approaches 160 yen. Analysts say intervention alone may not reverse the yen’s longer-term decline, given the wide US-Japan interest-rate gap and other pressures. The Bank of Japan kept rates unchanged last week, though markets imply about a 60% chance of a rate hike by September.

The Indian Opinion

Claims that intervention has failed completely are premature, but treating it as a lasting fix is equally careless. The yen’s rebound was sharp, yet it has already lost much of that move. Markets will judge Japan’s next step against actual currency levels and interest-rate policy, not warnings alone. The key test is whether the dollar stays below 160 yen without repeated intervention.

Source: livemint.com

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