Investors bet on the Federal Reserve raising interest rates, causing the Japanese yen to fall to its lowest level in nearly a year, with bearish bets reaching a nine-year high.

Influenced by the market's expectations for further interest rate hikes by the Federal Reserve within the year, the Japanese yen fell to its lowest level in nearly a year against the US dollar on Wednesday, sparking speculation in the market about the Japanese government intervening in the currency market again. Data shows that the yen fell by 0.2% at one point against the US dollar, reaching 160.79 yen to 1 US dollar, the lowest level since July 2024. Meanwhile, the US dollar has been generally strengthening in the global foreign exchange market, with investors continuing to bet that the Federal Reserve will further tighten monetary policy later this year, putting pressure on major non-US currencies. Although the Bank of Japan announced an interest rate hike just this Tuesday, it is widely believed that its tightening policy is still not sufficient to curb inflation and stabilize the yen exchange rate. Bank of Japan Deputy Governor Masahiro Nakaoka stated at a press conference after the interest rate decision that the exchange rate trend has a significant impact on the economy and prices, but it is not the direct target of the Bank of Japan's monetary policy. Market analysts point out that investors are concerned about the relatively mild interest rate hike by the Bank of Japan, while interest rates in the US may continue to rise, maintaining a high US-Japan interest rate spread and continuing to pressure the yen. Indeed, this round of yen depreciation occurred shortly after the Japanese government conducted large-scale interventions in the currency market. Data shows that the Japanese authorities injected a total of 11.73 trillion yen (approximately $736 billion) into the foreign exchange market between April 28 and May 27, setting a new record. According to data from the Japanese Ministry of Finance reserves, it is widely believed that the Japanese government may have sold some overseas assets, including US Treasury bonds, to raise funds for intervention. Japanese Finance Minister Kohei Otsuka recently reiterated that the authorities will closely monitor the exchange rate movements and stand ready to take appropriate measures to address abnormal exchange rate fluctuations when necessary. Analysts believe that in addition to the US-Japan interest rate spread, the rise in energy prices is also an important factor suppressing the yen. As Japan heavily relies on oil imports and international oil is usually priced in US dollars, the rise in oil prices triggered by the US-Iran conflict further increases Japan's import costs and demand for US dollars, putting additional pressure on the yen. Although the recent temporary agreement between the US and Iran to reopen the Strait of Hormuz for shipping and push for a ceasefire process is positive news, it has not significantly boosted the performance of the yen. Market data shows that speculative bets against the yen have risen to the highest level in nine years, indicating that the market is re-establishing "yen carry trade" involving borrowing yen at low interest rates to invest in high-yield assets. At the same time, following the latest Federal Reserve meeting, the interest rate market has largely priced in the expectation of at least one rate hike before October, further strengthening the US dollar's advantage. Analysts point out that if the yen falls below the 160 level and continues to weaken, the pressure for Japanese government intervention will significantly increase. From a technical standpoint, the key observation point after 160.79 is 161.95 yen to 1 US dollar. Once this level is breached, the yen will fall to its lowest level since December 1986, potentially heightening expectations for official intervention actions in the market.