The U.S. dollar advanced against the Japanese yen on Friday, reaching roughly 160 yen for the first time since July 2024, when Japanese officials stepped in to support the currency. The dollar was last trading about 0.22% higher against the yen at 160.15 per dollar, near exchange rates some market participants see as a possible prompt for official intervention.
Across broader markets, the dollar index climbed 0.17% to 100.4, positioning it to record its strongest monthly rise in almost a year. Traders attributed part of the demand for the U.S. currency to the ongoing war in the Middle East, with investors favoring the dollar as a safety asset instead of more traditional havens such as gold or government bonds.
For months the yen and Japanese government bonds have faced steady downward pressure. That stress has deepened as Prime Minister Sanae Takaichi pursues a more expansive fiscal stance intended to stimulate growth. Such fiscal moves complicate the Bank of Japan's efforts, given its objective of gradually lifting interest rates to rein in inflation.
Since the onset of the war, the yen has depreciated by over 2% against the dollar, making it one of the poorest performers among major currencies in the past month. Market participants point to Japan's fragile public finances and a significant dependence on energy imports as factors behind the currency's relative weakness.
Tokyo authorities have repeatedly warned they could step in to support the yen should it weaken excessively. The last recorded intervention occurred in July 2024, when the yen fell to around 161 per dollar, its weakest position since the 1980s.
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