Yen Nears Intervention Line at 160 as Markets Await Japanese Rate Hike to 1.25%

The Japanese yen fell to 159.4 per dollar, approaching the 160 level that markets consider the government intervention line, losing about 1% of its value over the week. Expectations now lean toward the Bank of Japan raising interest rates to 1.25% at its September 17-18 meeting, making it the only hawkish central bank among major peers.

Paradoxically, the yen's weakness itself—which supports exporters' stocks and pushed the Nikkei index up nearly 5% over the week to near 68,900 points—is what forces the central bank to act, while the risk of direct intervention by Japan's Ministry of Finance remains present in any session as the currency nears the 160 barrier.