The US dollar was set for a second straight day of losses against the Japanese yen on Friday after Japan was reported to have intervened in currency markets to support its weakening currency, Reuters reported.The greenback was on course for its sharpest weekly fall versus the yen since early February, down about 1.7 per cent for the week.Markets stayed cautious after Japan’s top currency diplomat Atsushi Mimura said speculative positions were still visible in the market, signalling continued concern among authorities over rapid yen moves.The dollar briefly fell from around 157.1 yen to 155.49 yen before recovering some ground after Mimura’s comments. It was last trading flat at 156.62 yen.Two sources familiar with the matter told Reuters that Japanese officials intervened on Thursday to buy yen after the currency weakened to 160.7 per dollar, its lowest level since July 2024.“The durability of intervention remains uncertain,” said Uto Shinohara, senior investment strategist at Mesirow Currency Management in Chicago.“Historically, its effects tend to fade without accompanying policy shifts, rate hikes or coordination.”Data released by the Bank of Japan on Friday suggested authorities may have spent up to 5.48 trillion yen ($35 billion) during the operation, just below the $36.8 billion used in July 2024.The yen has remained under pressure because of the wide gap between US and Japanese interest rates.Its weakness has also been worsened by higher crude oil prices linked to the Iran war, which have supported the dollar.On the policy front, the European Central Bank and the Bank of England kept interest rates unchanged on Thursday, in line with expectations. That followed earlier pauses by the US Federal Reserve and the Bank of Japan.However, both the ECB and BOJ signalled they could begin raising rates as soon as June to contain inflationary pressure caused by higher imported energy costs.The euro rose 0.32 per cent to $1.177 and was heading for a second straight weekly gain.Sterling was up 0.25 per cent at $1.1364 and was on track for a fifth consecutive week of advances.The dollar fell 0.27 per cent to 0.779 Swiss franc and was headed for a second weekly loss.“While markets are pricing roughly a two-thirds chance of a June hike from the BOJ, expectations for Fed cuts have largely evaporated,” Shinohara said.“That divergence, alongside a more hawkish Fed, limits the scope for sustained yen appreciation.”
