Apr 29 2024: The yen experienced a sudden surge against the dollar on Monday, as traders pointed to suspected yen-buying intervention by Japanese authorities aimed at bolstering the currency, which has been hovering near 34-year lows.
The dollar sharply declined to 156.55 yen from its earlier peak of 160.245. Sources in the trading sector noted Japanese banks selling dollars in exchange for yen.
Traders had been anticipating action from Tokyo to support the yen, which has depreciated by 11% against the dollar this year despite Japan’s historic exit from negative interest rates failing to strengthen the currency.
Japan’s Ministry of Finance was not available for immediate comment, as Japan observed a holiday on Monday.
Bank of Japan Governor Kazuo Ueda mentioned in a press conference after a recent meeting that monetary policy doesn’t specifically target currency rates, although fluctuations in exchange rates could significantly impact the economy.
In 2022, Japan intervened in the currency market three times by selling the dollar to acquire yen, first in September and then again in October as the yen approached a 32-year low of 152 against the dollar.
The yen’s decline has been attributed to rising U.S. interest rates compared to Japan’s near-zero rates, prompting investors to move funds from yen to dollars for “carry” purposes.
Earlier this month, the United States, Japan, and South Korea agreed to “consult closely” on currency markets, signaling a collective concern. Tokyo has also reinforced its stance against excessive movements in the yen, which has also weakened against other major currencies like the euro, Australian dollar, and Chinese yuan.
