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Yen slips past 161, Tokyo intervention clock ticks
Japan warned it would act as the yen slid past $161 for the first time since 1986. A sharp spike above 162 could bring a response, dealers said.
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The yen touched its weakest level since December 1986 on Tuesday, sliding past 161 per dollar in early Tokyo trading. The move extended a June slide that has pushed the currency into intervention territory, with Finance Minister Shunichi Suzuki and Vice Finance Minister Kazuo Kanda repeating warnings that authorities would respond to disorderly moves.
Tokyo last stepped into the market in October 2022, spending roughly $42 billion to defend the yen near 150. A second intervention followed in 2023. Each operation faded within weeks as the interest-rate gap between the Bank of Japan and the Federal Reserve kept the yen under pressure. The BoJ holds its policy rate at 0% to 0.1%, while the Fed's benchmark sits at 5.25% to 5.5%. That spread has made the yen a funding currency for carry trades, where investors borrow cheaply to buy higher-yielding assets.
Traders said the trigger for intervention would be the pace of the move, not a specific level. A sharp spike above 162 could draw a response, several dealers told Reuters. Gradual drift gives Tokyo less reason to act.
The dollar index slipped 0.2% on the day, retreating from its highest since May 2023. The pullback reflected position-squaring ahead of Friday's nonfarm payrolls report. Economists expect the U.S. economy added 190,000 jobs in June, down from 272,000 in May. A print near that estimate keeps the Fed on hold. A miss below 150,000 could revive bets on a September rate cut.