2026.08.1101:10:25UTC+00Yen Gives Back Half of Intervention Gains

The Japanese yen weakened beyond 159 per dollar on Tuesday, giving back roughly half of the gains from its recent intervention-fueled rally and putting to the test the willingness of both Tokyo and Washington to defend the currency. At the end of July, Japan and the US mounted a record-sized, coordinated yen-buying operation after the currency slid to 40-year lows and stoked concerns over global economic stability, but they subsequently disappointed markets by refraining from further action. The yen has remained under pressure from structural factors, including wide interest rate differentials, growing fiscal worries, and elevated energy and import costs. At the same time, the Bank of Japan, in its summary of opinions from the July meeting, underscored rising risks of faster inflation, with one policy board member indicating that the pace of interest rate increases could quicken.