The yen breaks through 160, and intervention expectations are rising

this yen It hit a nearly 38-year low against the dollar late on Wednesday, raising expectations that authorities may intervene in currency markets again.

FactSet data showed that the yen fell to 160.82 against the U.S. dollar, breaking the historical record of 160.03 set on April 29 and hitting its lowest point since 1986.

The last time the yen broke above the 160 level, the currency subsequently strengthened sharply during the trading session, prompting analysts to speculate on possible intervention.

Japan’s Finance Ministry later confirmed the intervention in May, saying it had spent 9.7885 trillion yen ($62.25 billion) on currency intervention between April 26 and May 29, according to a statement translated by Google.

According to records from the Japanese Ministry of Economy, this is the first time the Japanese government has taken such market measures since October 2022.

Carol Kong, economist and currency strategist at the Commonwealth Bank of Australia, believes that “we may be closer to another foreign exchange intervention.”

She also said that if the U.S. May personal consumption expenditure data due to be released on Friday is stronger than expected, it may become a catalyst for Japanese intervention and push the U.S. dollar/yen exchange rate sharply higher.

Kong noted that the yen’s continued decline prompted Japan’s chief monetary diplomat, Masato Kanda, to step up his warnings.

Reuters reported that Kanda said that Japanese authorities are “seriously concerned and remain highly vigilant” about the rapid depreciation of the yen.

“There is a general belief that the current weakness in the yen is not necessarily justified, so it is believed to be driven by speculators,” Kanda told reporters on Wednesday. He added that authorities “have been preparing to take action to deal with excessive volatility”.

—CNBC’s Ruxandra Iordache and Sam Meredith contributed to this report.