The yen is falling against the dollar on Tuesday amid persistent expectations that the Federal Reserve (Fed) will begin cutting interest rates after its September meeting.
The interest rate differential between the US and Japan continues to weigh on the yen, despite recent comments from Japanese officials about possible intervention to stabilize the nation's currency, according to Reuters.
On Friday, the dollar fell to 151.86 yen for the first time since April 10, as weaker-than-expected monthly US jobs data led to losses after the Bank of Japan released data suggesting official intervention could amount to about 9 trillion yen ($58.37 billion).
Japan's top currency diplomat, Masato Kanda, said the government was prepared to intervene in the currency market to support the yen.
"It is preferable for exchange rates to remain stable in line with fundamentals. However, if there are excessive fluctuations or disorderly movements due to speculation, the market is dysfunctional and the government may have to take action," he stressed.
While investors are speculating that the Fed will start cutting interest rates after the September meeting, Federal Reserve Board of Governors (Fed) member Michelle Bowman warned that she is prepared to raise rates further if progress in bringing inflation down to 2% stalls or reverses.
Although the interest rate differential between the Fed and the Bank of Japan favors the yen, DBS analysts believe that the yen remains the most undervalued of the G10 currencies, while the dollar is highly overvalued.
At the time of writing, the USD/JPY is up 0.26% at 154.28.
Markets believe that Japan's intervention is short-term support and will not lead to any fundamental changes in the Japanese yen.
The EUR/JPY and GBP/JPY were up 0.26% and 0.20% at 166.19 and 193.74, respectively.
The AUD/JPY and NZD/JPY were up 0.01% and 0.39% to 101.92 and 92.85, respectively.
The Australian dollar came under pressure after the Reserve Bank of Australia decided to keep interest rates at 4.35%, which was in line with analysts' forecasts.
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