Yen passes 160 per dollar to hit weakest level in a month

The Japanese yen has slipped to its weakest point in a month, reaching 160 US dollars for the first time, according to wire reports. The decline intensified on Aug 28 after Federal Reserve Chairman Kevin Warsh hinted at the central bank's determination to achieve its inflation target. Traders are observing yen levels closely to gauge when the authorities may intervene to support the currency.

Hedge funds have continued to bet against the yen, with the latest data showing a second week of short positions. The yen had struggled to surpass 155 per dollar earlier in the month following a joint intervention by the US and Japan on July 31, their first coordinated action since 1998. Despite US Treasury Secretary Scott Bessent's efforts to curb long-term US borrowing costs, the yen has faced pressure due to rising US rates, Japan's heavy debt burden, and recent oil price hikes.

Bank of America's Alex Cohen expects intervention expectations to rise as the yen hits the psychologically significant level of 160 per dollar. However, the Federal Reserve's Chairman warns that inflation is not easing significantly, which could lead to interest rate hikes. Investors are concerned about the widening rate gap between Japan and other economies, as well as the impact of high oil prices.

Hedge funds are returning to shorting the yen, and some experts believe another intervention could occur before the Bank of Japan's potential hike in September.