(Bloomberg) -- The yen slid to the verge of 160 to the dollar, a key threshold that’s raising the specter that policymakers in Tokyo will swoop in again to defend the currency.
As rising US bond yields pushed the dollar higher, the yen slipped 0.1% to 159.94. It marked the third straight daily decline as traders brace for the Federal Reserve to step up its interest rate hikes, giving investors an incentive to shift cash to the US as yields surge further above those in Japan.
Japan’s chief currency official Atsushi Mimura on Thursday said he has a strong impression that the currency moves over the past few days have been “too fast” and reminded investors of the currency-market intervention a few months ago, when the yen hit a 40-year low of nearly 164 to the dollar.
“Mimura seems to be sending a signal that 160 is some sort of line in the sand, which is always risky since markets never met a line in the sand that they didn’t want to test,” said Win Thin, chief economist at Bank of Nassau 1982.
The currency weakness reflects the significant gap in interest rates between the US and Japan, with the Bank of Japan’s benchmark set at 1.25%, more than 2.5 percentage points below the Fed’s.