(Bloomberg) -- The yen weakened to a fresh 24-year low Wednesday, raising speculation over whether and when Japanese authorities would step in to prop up the currency as they did last month.

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The currency fell to 146.23 per dollar, surpassing the 145.90 level that prompted Japan’s first intervention to buy the yen since 1998. The pace of yen selling has slowed relative to earlier this year, but prospects for the US to keep raising rates while Japan maintains super-easy policy continue to weigh.

Traders will be looking at the 1998 high of 147.66 as the next key target, though strategists have said authorities won’t necessarily have a line in the sand at which they’ll intervene again and are likely focusing on the speed of declines. The Ministry of Finance spent 2.84 trillion yen ($19.6 billion) in September to limit the yen’s losses.

“USD/JPY may top 146 briefly today, but there is so much tension that duration time will be short,” said Yoshio Iguchi, managing director of Traders Securities in Tokyo. “The chicken race will continue with people wanting to test the upside but at the same time scared of being countered by intervention.”

Policy Pressure

Despite the efforts of authorities, the Bank of Japan’s policy of rock bottom interest rates continues to weigh on the yen as global peers aggressively hike to rein in inflation. A selloff in Treasuries this week has helped push the dollar higher and increase the pressure on the yen.

“With Treasury yields seemingly heading back above 4% at 10-years, the dollar generally bid on risk aversion and Japanese Prime Minister Kishida yesterday fully endorsing Kuroda and BOJ policy, higher dollar-yen levels are readily justified,” said Ray Attrill, head of foreign-exchange strategy at National Australia Bank Ltd. “But if we see a rapid move up from here as we are just now seeing, then we may see another burst of intervention.”



Speaking Tuesday ahead of his visit to Washington DC for Group of Twenty meetings, Finance Minister Shunichi Suzuki reiterated a warning to investors about the potential for further intervention, saying that authorities will act appropriately if there are excessive moves.

Still, evidence for the Japanese government’s reasoning behind stepping into the market last month looks less compelling at the moment. One-week historical volatility in the dollar-yen has fallen to its lowest since March, indicating recent moves are far from extreme.

Intervention Hopes See Japan Retail Traders Bet on Yen Rebound

Markets are expecting the Federal Reserve to continue with its most aggressive monetary policy tightening in decades, especially with recent data showing continued strength in the labor market. Thursday’s US inflation report is the next key catalyst for investors.

“CPI tomorrow could provide a catalyst for direction either way but until then, traders won’t be taking big positions,” said Iguchi.

(Updates with additional context, volatility data.)

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