Yen passes 160 per dollar to hit weakest level in a month

Published Sat, Aug 29, 2026 · 10:39 AM

THE yen moved past 160 per US dollar to its weakest level in a month, extending a slide that’s erased more than half of its intervention-fuelled gains.

The Japanese currency fell as much as 0.5 per cent to 160.20 versus the greenback on Friday (Aug 28) after the dollar got a boost from Federal Reserve Chairman Kevin Warsh’s vow to hit the central bank’s inflation target.

Traders are now carefully watching yen levels for signs of when authorities might move to protect the currency. 

Hedge funds added to short yen bets for a second week in a row, according to Commodity Futures Trading Commission data for the period ending Aug 25 released on Friday.

The yen has been under pressure since failing to push through 155 earlier this month in the wake of joint action on Jul 31, when the US and Japan conducted their first coordinated yen-buying intervention since 1998.

The latest bout of yen weakness emerges even after US Treasury Secretary Scott Bessent made a fresh attempt to rein in long-term US borrowing costs from multi-year highs.

“With the yen touching the psychologically relevant level of 160 per US dollar, intervention expectations will inevitably increase,” said Alex Cohen, a foreign-exchange strategist at Bank of America. “Though given that the move is broadly dollar and US rates driven in nature, authorities are likely to be a bit more patient here.”

The greenback recovered as Warsh warned that inflation isn’t slowing meaningfully, boosting bets on interest-rate hikes. Investors are concerned over the wide rate gap between Japan and other economies, the nation’s heavy debt burden and the impact of recent gains in oil prices, which have reverberated globally. 

Hedge funds returned to building short yen positions, while they initially slashed those bearish bets in reaction to the intervention. They have been negative on the currency since July 2025.

“160s is no longer a valuation level. It’s becoming a policy level. Washington and Tokyo have effectively put a political line in the sand in the mid-160s,” said Masahiko Loo, senior fixed-income strategist at State Street Investment Management. “We would not rule out another round of intervention before a potential Bank of Japan hike, as early as September.”

The Bank of Japan is meeting next month to decide on rates with markets pricing in about an 80 per cent chance of a hike. The rate gap with the US remains vast while traders are also expecting a rate increase by the Federal Reserve this year.

Geoffrey Yu, a senior strategist at BNY, said he expects Japanese authorities to hold off on interventions for now as the rates meeting is approaching. 

“Tokyo must deliver if they want to stabilise foreign-currency markets,” he said. 

Prime Minister Sanae Takaichi’s government is said to be supportive of a near-term BOJ hike given the yen weakness.

The yen had been near a four-decade low of around 164 per dollar before a bout of intervention in the last days of July that saw the US join Japan in defence of the currency.

Back in the summer of 2024, authorities also intervened to support the yen when it crossed the 160-per-dollar level. BLOOMBERG