Yen stays pressured near 159.4 per dollar, weak fundamentals cited

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.