Yen Slides Back Toward 160 as Intervention Gains Fade

The Japanese yen is rapidly giving back the gains from the historic U.S.-Japan currency intervention.
USD/JPY has climbed back to roughly 159.7 after the coordinated intervention briefly strengthened the yen from a 40-year low near 164 to around 155.2.
Nearly half of that intervention-driven rally has now been erased.
Tokyo and Washington stepped into the currency market at the end of July, with Japan potentially spending tens of billions of dollars buying yen while the U.S. Treasury also purchased the currency.
But the underlying pressure has not disappeared.
Japan still faces a large interest-rate gap with the United States, keeping carry trades attractive and maintaining selling pressure on the yen.
Attention is now shifting toward the Bank of Japan.
Markets increasingly expect the BOJ to raise rates in September, while policymakers are reportedly considering a faster tightening cycle if yen weakness and inflation persist.
Currency intervention bought Japan time.
The question now is whether monetary policy can do what intervention alone has failed to achieve: create a lasting reversal in the yen.