Yen trades near 160 per dollar as intervention impact fades

The yen traded close to 160 per dollar on Tuesday as effects from the U.S.-Japan intervention continued to diminish. The Australian dollar remained near an eight-week high after the Reserve Bank of Australia held interest rates steady.

The Japanese currency stood at 159.1 per dollar, showing slight strength during the day. The yen weakened by 0.9% on Monday, moving further from last week’s three-month high of 155.20 following the rare U.S.-Japan yen-buying intervention at the end of July.

The intervention occurred after the yen dropped to a 40-year low of 163.99 per dollar. The currency has given back nearly half of those gains, leading traders to anticipate authorities will re-enter the market.

Speculators reduced bearish yen positions by the largest amount in more than 12 years. U.S. regulatory data showed the net short yen position decreased by $8.865 billion to $3.604 billion in the week ending August 4.

Analysts expect speculators to rebuild short positions, though faster monetary tightening in Japan remains a potential risk.

The Reserve Bank of Australia maintained its cash interest rate at 4.35%, meeting expectations. The central bank warned it may need to raise rates again. The RBA has increased rates by 75 basis points since February to address inflation driven by rising energy costs.

The Australian dollar held steady at $0.7054, staying near its strongest level since mid-June.