Yen Languishes Near 1-Month Low

The Japanese yen appreciated past 160 per dollar on Monday but remained near one-month lows as the dollar strengthened following hawkish remarks from Federal Reserve Chair Kevin Warsh that boosted expectations for a US rate hike in September. Markets are now pricing in around a 57% chance that the Fed will raise rates by 25 basis points next month, up sharply from about 40% a week ago. Traders are also betting on a potential Bank of Japan rate increase in September amid concerns over yen weakness and import-driven inflation. The yen has retraced more than half of its gains following the joint Japan-US currency market intervention in late July, with persistent structural weakness continuing to weigh on the currency. The yen remained under pressure from wide interest rate differentials, growing fiscal concerns in Japan and elevated oil prices linked to the Middle East conflict.

The Japanese Yen touched 159.84 against the USD, the lowest since July 2026. Over the past 4 weeks, US Dollar Japanese Yen lost 2.23%, and in the last 12 months, it increased 8.71%.

The Japanese yen traded around 159.4 per dollar on Friday, struggling to extend gains from the joint intervention by Tokyo and Washington nearly a month ago as persistent structural weakness continued to weigh on the currency. The wide interest rate gap between Japan and other major economies continued to weigh on the yen, prompting investors to borrow at low rates in the currency and seek higher returns in overseas assets. Rising fiscal concerns in Japan and elevated oil prices linked to the Middle East conflict further reinforced the bearish outlook for the yen. On the monetary policy front, the Bank of Japan is increasingly expected to raise interest rates in September amid concerns over currency weakness and import-driven inflation. Meanwhile, data showed Japan’s unemployment rate fell to 2.4% in July, the lowest in a year, while Tokyo’s inflation rate accelerated to a five-month high in August.