TOKYO / MENA Newswire / — The dollar headed for a weekly gain on Friday as the yen hovered near the key 160 per dollar level, keeping currency markets focused on Japan. The Japanese currency traded around 159.9 per dollar in Asian and European dealings. It was on course for a fourth straight weekly decline, even after Japan spent heavily to support it in recent weeks.
The dollar index rose about 0.4 percent for the week and gained about 1.3 percent over the month. Higher U.S. yields supported the greenback against major peers. Stronger U.S. data also kept attention on interest rate gaps between the United States and Japan. The euro and sterling moved in narrow ranges, while the yen remained the main focus in major currency trading.
Japan’s Ministry of Finance said it spent 11.7349 trillion yen from April 28 to May 27 in foreign exchange operations. That marked the country’s largest monthly currency intervention total on record. The operations followed a slide beyond 160 per dollar in late April. The yen briefly strengthened after that action, but it later moved back toward the same level.
Yen pressure returns
Japan’s foreign reserves fell by $77.1 billion in May to $1.306 trillion. The decline followed the large currency operations and drew attention to the scale of official support. Finance Minister Satsuki Katayama said authorities were ready to respond to excessive currency moves. She also said Japan was watching speculative trading closely. Officials have used similar language during past periods of sharp yen weakness.
The yen has weakened as Japan’s interest rates remain far below U.S. rates. The Bank of Japan held its short term policy rate at 0.75 percent at its April meeting. The U.S. Federal Reserve kept its target range at 3.50 percent to 3.75 percent at its latest policy meeting. That gap has remained a central factor in dollar yen trading.
Dollar gains hold
Oil prices above $90 a barrel added pressure on Japan’s currency because the country imports much of its energy. Higher energy import costs can affect Japan’s trade balance and inflation. The dollar also drew support from demand for liquid assets during market stress linked to tensions in the Gulf. Those moves came as investors tracked U.S. labor data due later on Friday.
The yen last moved near 160 per dollar in late April, when Japan entered the market to buy yen and sell dollars. This week’s return to that level revived focus on official warnings and reserve data. The dollar’s weekly advance showed broad support across major currencies, while the yen’s losses kept Japan at the center of global foreign exchange trading.