Yen heads for biggest weekly drop since May despite Tokyo pledges

The yen weakened against the dollar this week, on pace for its largest weekly decline since May. The slide follows repeated warnings from Japanese officials about one-sided moves. Traders pointed to the widening interest rate gap between Japan and the United States as the main driver. The Bank of Japan held rates steady at its last meeting, while the Federal Reserve signalled it would keep borrowing costs higher for longer. That gap has kept the dollar bid and the yen under pressure.

Tokyo's verbal intervention has not stopped the currency from falling past the 160 level against the greenback. That threshold previously triggered direct dollar-selling by the Ministry of Finance. Market participants said the speed of the yen's depreciation raises the risk of more forceful action, though no concrete steps have been announced.