Dollar Heads for Largest Weekly Decline Against Yen as Japan Intervenes
Dollar Faces Biggest Weekly Loss Against Yen Since February
The dollar is on track for its biggest weekly loss against the yen since February, after Japan intervened to support its currency. The yen has been under sustained pressure from wide US-Japan interest rate differentials, which has been compounded by higher oil prices linked to the Iran war, supporting the dollar.
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 up 0.26% to 157.04.
The intervention by Japan's authorities was carried out to buy the yen on Thursday after it hit 160.7 per dollar, its weakest since July 2024. Two sources familiar with the matter told Reuters that officials had intervened to support the yen. Japan is heading into its Golden Week holiday next week, with analysts speculating that officials could step in to support the yen again.
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| Intervention | Date | Amount (Yen) | Amount (USD) |
|---|---|---|---|
| Latest Intervention | 2024 (no specific date mentioned) | up to 5.48 trillion yen | up to $35 billion |
| July 2024 Intervention | 2024 | $36.8 billion | $36.8 billion |
Bank of Japan data released on Friday suggested authorities may have spent up to 5.48 trillion yen ($35 billion) during the operation, just below the $36.8 billion deployed in July 2024. The dollar was on track for its steepest weekly decline against the yen since early February, down about 1.7%.
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.
| Currency | Current Rate | Weekly Change |
|---|---|---|
| Euro (vs. USD) | $1.1721 | Flat |
| Sterling (vs. USD) | $1.135803 | -0.16% |
| Swiss Franc (vs. USD) | 0.78150 | -0.03% |
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The euro was flat at $1.1721, heading for a second consecutive weekly gain. Sterling was last down 0.16% at $1.135803 and poised to snap four straight weeks of advances. The dollar was last down 0.03% to 0.78150 against the Swiss franc and was set for its second week of losses.
Investor Takeaway
Investors should be cautious of potential market volatility due to Japan's currency intervention.
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