On Monday, the Japanese yen experienced a sudden surge against the dollar, catching traders off guard and sparking speculation about potential intervention by Japanese authorities. The currency, which has been hovering near 34-year lows, saw the dollar plummet to 156.55 yen from its previous high of 160.245. The reason behind this dramatic shift remains unclear.
Traders are closely monitoring the situation, anticipating any moves by Tokyo to bolster the yen, which has depreciated by 11% against the dollar since the beginning of the year.
Some analysts suggest that the abrupt movement in the currency market bears the hallmarks of intervention by the Bank of Japan (BoJ), seizing the opportunity presented by a Japanese public holiday, which typically results in lower liquidity in the USD/JPY pair and potentially amplifies the impact of intervention.
However, others are more cautious, noting that if intervention had occurred, it might have been more rapid and formally announced by the Ministry of Finance (MOF).
The uncertainty surrounding the yen’s surge underscores the delicate balance of forces at play in the foreign exchange market and the heightened vigilance among traders for any indications of intervention or policy adjustments by Japanese authorities.