Yen Surges as Traders Brace for More Intervention
By Aboki Forex —
The yen strengthened sharply against the US dollar, leaving traders on high alert for further intervention by Japanese authorities in the foreign-exchange market.
The Japanese currency rallied as much as 1.2% to 158.22 per dollar, a sharp move that kept market participants watching for signs that officials are stepping in again.
Hawkish BOJ board member opens door to bigger hikes
The yen had strengthened earlier in the session after Bank of Japan Board Member Hajime Takata, one of the bank's most hawkish members, left the door open for an outsized interest-rate move as well as back-to-back rate hikes. A gauge of the dollar, meantime, fell 0.3%.
Traders now see a higher chance that the BOJ could act more aggressively, which would narrow the gap between Japanese and US interest rates. That makes the yen more attractive relative to the dollar.
Coordinated support unseen in decades
Tokyo and Washington have joined forces to support the yen to a degree unseen in decades, raising the stakes for anyone betting against the currency. Their first coordinated yen-buying operation since 1998 sparked a rally of about 5% from the weakest level in around four decades near 164 per dollar.
Both governments have signaled further joint action if needed. That keeps the market on edge, with any sharp drop in the dollar-yen rate likely to trigger fresh speculation about official intervention.