Yen’s Sudden Jumps Raise Questions Over Japan’s Next Move
By Aboki Forex —
Every few trading sessions, the yen jumps against the dollar and then quickly falls back. This pattern has become common in recent weeks. Traders and analysts are debating whether Japanese authorities are behind the moves.
On Thursday, the yen rose 0.5% against the dollar in just two minutes during New York trading. It then gave up all those gains. A similar move happened on Tuesday. On May 8, the yen also climbed briefly before reversing course.
No one can say for certain what is driving these blips. But traders are watching closely. The moves may signal Tokyo’s discomfort with the yen’s weakness. The mere possibility of intervention makes betting against the yen riskier.
“My interpretation is that the Ministry of Finance is uncomfortable with dollar-yen above 160 and wants to discourage another test of that level,” said Gareth Berry, a strategist at Macquarie Group in Singapore. “These proactive nudges and warning shots point in this direction.”
The momentary surges come after a stretch of reported intervention in currency markets. Japanese authorities have not commented on whether they stepped in. But sources say intervention occurred on April 30. Analysis of central bank accounts suggests Japan may have spent as much as ¥10 trillion supporting the yen through the Golden Week holiday.
“There’s caution over intervention, so a slight move can spook people,” said Marito Ueda, managing director at SBI FX Trade.
There is no definitive evidence authorities are behind the latest moves. Unlike past interventions, there have been no fresh public warnings from officials. Traders have not reported widespread rate checks. The Bank of Japan’s data shows no clear signal. But Japan has a history of pairing large interventions with smaller follow-up operations. In late 2022, a ¥729.6 billion yen-buying operation followed a much bigger ¥5.62 trillion intervention.
Still, the yen continues to trend weaker. Some investors question what was achieved. The yen traded at 158.48 per dollar in London on Friday, down from a recent high of 155.04 on May 6.
“It’s likely the MOF going ‘we’re still here’,” said Nick Twidale, an analyst at ATFX Global Markets. “They’re not smashing it again and again with intervention because it doesn’t work.”
Analysts at Goldman Sachs have assessed Japan’s capacity to counter yen weakness. They estimate authorities could conduct intervention on the scale seen in late April around 30 more times. But they expect officials to conserve reserves and act selectively.
Whether the latest moves were driven by intervention, rate checks or jittery trading, investors are on edge. “If last night’s move was intervention too, then I’m not really sure what the point of it was,” said Ayako Sera, senior market strategist at Sumitomo Mitsui Trust Bank. “It feels like the finance ministry is just buying time.”