BOJ intervenes yen, but yen jumps again

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BOJ intervenes yen, but yen jumps again

Japan's yen jumps on suspected BOJ intervention, but fails to hold its gains against a robust U.S. dollar. SINGAPORE Reuters -- The Japanese yen made a thumping 4 yen jump for a second straight session on Monday on suspected early intervention by the Bank of Japan, but struggled to hold its gains against a strong U.S. dollar.

In early deals, the yen hit a low of 149.70 per dollar before being swept to a high of 145.28 within a matter of minutes, a move that suggests the BOJ had stepped in for a second consecutive day. The currency dropped back to near 148 soon.

Ray Attrill, head of FX strategy at National Australia Bank in Sydney, said it's blindingly obvious that the BOJ is intervening. The dollar-yen wouldn't be moving like this otherwise. It was the second confirmed instance of Japanese intervention, although traders suspect that the BOJ had stepped in on other occasions in the past month to shore up a currency that has tumbled 22% this year against the dollar.

The intervention helps the BOJ limit yen depreciation and gives it time to develop its ultra-low interest rates policy, which is at odds with a global wave of tightening and has widened the gap between the U.S. and Japanese interest rates, according to analysts at Goldman Sachs.

Since the first intervention, the yen s beta to U.S. rates have fallen, and repeated intervention steps will likely keep it that way for a long time, in part by inducing two-way volatility into the dollar yen, Goldman wrote last week.

We think this policy mix could be in place for some time and is sub-optimal and unsustainable in the medium term. The dollar index went up 0.063% at 111.87, with the euro down 0.02% to $0.9858.

The pound was last trading at $1.1343, up 0.36% on the day, helped by weekend news that former prime minister Boris Johnson withdrawn from Monday's contest to replace Liz Truss, who was forced to resign after she launched an economic programme that caused turmoil on financial markets.

Rishi Sunak has emerged as the frontrunner to become Britain's next prime minister.

The Australian dollar was down 0.4% versus the dollar at $0.6370, while the kiwi was up 0.16% on its U.S. peer at $0.576.

The price of digital currency rose 2.08% to $19,578 at the end of the day.