(Bloomberg) — The yen held steady near the key level of 160 per dollar on Wednesday, keeping investors on the lookout for more intervention by officials in the foreign-exchange market.
Japan’s currency was little changed at around 11 a.m. in New York at 159.23 per dollar. It has depreciated more than 1% in August, unwinding some of the US-Japanese efforts to strengthen the currency at the turn of the month.
The coordinated yen-buying came as the currency was flirting with its weakest levels in four decades, trading close to 164 per greenback. However, underscoring the limits of such efforts in the face of interest-rate differentials that favor the dollar, Japan’s currency has erased a chunk of its rebound, once again creeping toward the 160 area that has contained yen weakness in the past.
It’s “premature to declare the intervention threat” is over, said Nathan Thooft at Manulife Investment Management.
“Japanese authorities have already demonstrated a willingness to act, including coordinated action with the US Treasury, and levels approaching or exceeding the recent intervention zone are likely to keep traders cautious,” he said. “We definitely are still on intervention watch.”
Japan’s benchmark rate, at 1%, compares with the Federal Reserve’s target range of 3.5% to 3.75%.
“Confidence in Japan’s commitment to defending the yen improved after coordinated intervention with the US,” said Shusuke Yamada, a strategist at Bank of America. “However, as dollar-yen has rebounded without any intervention over the past week, that credibility appears to have eroded.”
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