Yen Surpasses 160 per Dollar

The Japanese yen continues to weaken against the US dollar, surpassing 160 yen per dollar. This marks the lowest level in about a month since the Bank of Japan's intervention in the foreign exchange market, indicating that the effects of the joint intervention at the end of July have dissipated. On the 2nd, the yen traded between 160.25 and 160.30 yen per dollar, the lowest level since the joint intervention. The yen had previously fallen to the 163-164 yen range but rebounded to 155-155.23 yen due to the joint intervention, only to lose more than half of its regained value with this recent weakness. Experts view the breach of the 160 yen level as a collapse of a psychological resistance line and are paying attention to the possibility of further weakness. The main reason for the yen's depreciation is the interest rate gap between Japan and the United States, with the Bank of Japan maintaining an ultra-loose monetary policy while the US Federal Reserve continues to keep high interest rates. Concerns about Japan's fiscal health are also exacerbating the yen's weakness, with the yield on Japan's 10-year government bonds reaching 3%. The US Treasury Secretary has urged the Bank of Japan to take monetary policy measures to respond to the yen's depreciation, raising expectations for a rate hike in September. The market sees an 80-90% probability that the Bank of Japan will raise rates at its meeting on September 17-18, but some analysts warn that a single rate hike may not be enough to reverse the yen's weakness.

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