NEW YORK: The US dollar fell sharply against the yen on Thursday after Japanese authorities were reported to have intervened in foreign exchange markets to support their currency, while oil prices retreated from four-year highs as investors assessed risks from the Middle East conflict.
Japanese Finance Minister Satsuki Katayama said earlier on Thursday that the time to take “decisive” action in the market was nearing, in her strongest signal yet of potential currency intervention to prop up the sagging yen.
Officials had intervened to buy the yen, two sources familiar with the matter told Reuters, after it hit its weakest against the dollar since July 2024.
The dollar fell by as much as 3 percent against the yen to 155.5 yen, making for the largest single-day drop since late December 2024. It was last down 2.36 percent at 156.51 yen.
“It’s pretty obvious given the discussion from the ministry of finance about potential intervention,” said John Velis, Americas macro strategist at BNY.
“It’s not really a surprise plus the fact that the yen was in its own world as a currency during the last four weeks or so and the intervention is pretty understandable,” Velis said.
The dollar index was down 0.70 percent at 98.17, on track to snap two straight sessions of gains.
The European Central Bank left interest rates unchanged as expected but extensively debated a hike to combat soaring inflation, which jumped 3 percent in April, above the ECB’s 2 percent target.
The euro rose 0.43 percent to USD1.1726.
The Bank of England also kept interest rates on hold and set out scenarios for the economic impact of the Iran war.
Sterling strengthened 0.79 percent to USD1.3579.
US President Donald Trump is slated to receive a briefing on Thursday on plans for a series of fresh military strikes on Iran.
The US Federal Reserve also left rates unchanged in an 8-4 decision on Wednesday, its most divided since 1992, which drew three dissents from officials who no longer think the bank should communicate a bias toward easing.
The dollar weakened 1.19 percent to 0.782 against the Swiss franc.
Comments