The Japanese yen, one of the reserve currencies, is weakening more and more against both the American dollar and our currency, the euro, so the probability of intervention is increasing.
Today, the yen fell to its lowest level since December 1986, prompting speculation that the government may intervene again to prop up the currency.
The Japanese currency fell 0.4 percent to 160.39 per dollar, above the level that last prompted the central bank to intervene in the market in April. The huge interest rate differential between Japan and the US is keeping pressure on the yen despite attempts to stem its fall.
Another big issue could emerge on Friday after the Federal Reserve's closely watched PCE inflation, which is crucial to the interest rate outlook, is released.
This is a very important aspect because the costs of intervention in the currency market are high. Japan spent a record 9.8 trillion yen ($61.1 billion) on the latest interventions. The yen has lost more than 12 percent of its value this year alone, hurting Japanese consumers and raising concerns for businesses.
