Yen nears 160 per dollar, testing Japan's resolve on intervention

The U.S. dollar-yen exchange rate approached 160 today, its weakest level since Japanese authorities intervened in the market in late April. The yen's decline continues despite Japan spending a record 11.73 trillion yen ($73.35 billion) to defend its currency between April 28 and May 27. Finance Minister Satsuki Katayama reiterated today that the government is prepared to respond to currency fluctuations at any time if necessary. Tsutomu Nakamura, an analyst at Gaitame.com Research, noted that while intervention fears are growing as the exchange rate nears 160, a test of that level could occur at any moment. Nakamura analyzed that pressure is mounting on the yen due to a lack of a breakthrough in U.S.-Iran permanent ceasefire negotiations and the wide interest rate differential between the U.S. and Japan, which has persisted since the Bank of Japan (BOJ) held rates in April. BOJ Governor Kazuo Ueda is scheduled to speak later today, marking his last official remarks before the central bank's rate decision meeting on June 16. The Overnight Index Swaps (OIS) market is currently pricing in an approximately 84% probability of a rate hike this month.