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18/07/24
153
JPY Surges Amid Possible Intervention
On Wednesday and Thursday, the Japanese yen rose sharply versus the dollar with USDJPY falling to a more than one-month low amid speculation of currency market intervention by Japan’s government.
On Thursday, USDJPY dropped 0.3% to 155.75 yen in morning trade. This came after the pair slipped 1.7% in the previous session, extending the sharp drop seen since last Friday. The pair had before that gained to nearly 162 yen, a 38-year high.
Traders believe the yen’s reversal is likely due to intervention by the Japanese government, after repeated warnings from officials that they would intervene if there were excessive volatility in currency markets.
Bank of Japan data indicated that Tokyo may have spent 2.14T yen ($13.5B) last week to intervene in currency markets.
Although the yen obtained some relief from rising bets that the U.S. Federal Reserve would start reducing interest rates in Sept., its massive gains could possibly be attributed to government intervention. There were no clear signals that Japanese officials had stepped in.
The dollar did however drop sharply in recent weeks on increasing speculation about a rate cut in September, after a string of dovish signals from the Fed and soft inflation data.
The Japanese government had last intervened in late April and early May when USDJPY crossed the 160 level.
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