Yen Jumps on Intervention Rumors
The Japanese yen surged against the US dollar on Monday, with traders citing rumors of intervention by Japanese authorities to support the struggling currency. The dollar fell sharply to 156.55 yen from a high of 160.245 earlier in the day, as Japanese banks reportedly sold dollars for yen.
This potential intervention comes as the yen has weakened significantly this year, falling 11% against the dollar. Even the Bank of Japan's historic exit from negative interest rates in December failed to lift the currency.
While the Finance Ministry declined to comment, Governor Kazuo Ueda acknowledged the impact of exchange rate volatility on the economy, though he emphasized that monetary policy does not directly target currency rates.
This potential intervention marks the fourth time Japan has intervened in the currency market this year, following three interventions in 2022 to buy yen and sell dollars. The yen has been under pressure due to the widening interest rate gap between the US and Japan, prompting investors to seek higher returns in dollar-denominated assets.
The US, Japan, and South Korea recently agreed to closely monitor currency markets, while Tokyo has also expressed concern over excessive yen weakness. The yen's decline has extended beyond the dollar, reaching multi-year lows against the euro, Australian dollar, and Chinese yuan.