Yen jumps suddenly as intervention speculation swirls

SINGAPORE: The Japanese yen surged suddenly on Wednesday amid heightened speculation of Tokyo stepping into currency markets again to lift the battered currency after last week’s suspected intervention sparked sharp gains.

The yen was last at 155.93 per U.S. dollar, up well over 1% on the day, firming from 157.77 to 155 within 30 minutes. Large offers were placed for dollar/yen at 156 on the EBS platform, a trader told Reuters.

Trading was thinned with markets in Japan closed for a holiday. Japan’s Ministry of Finance (MOF) was not immediately available for comment when contacted by Reuters.

Investors have been bracing for further intervention from Japanese authorities after sources told Reuters last week that Tokyo had stepped in to stem the yen’s decline on Thursday. Data showed Tokyo may have spent as much as $35 billion to support the yen.

Japanese Finance Minister Satsuki Katayama on Monday warned against speculative moves in foreign exchange, after a brief jolt higher in the yen at the start of the week sparked speculation Tokyo had again intervened to support the currency.

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“As I have said repeatedly, we will take decisive measures against speculative moves, in accordance with the statement signed between Japan and the United States last year,” Katayama told reporters after the Asian Development Bank’s annual meeting in Uzbekistan.

Traders at agent banks have been standing by to get intervention orders throughout the holiday period, a market source told Reuters.

Analysts though expect the intervention impact to be temporary.

Michael Brown, senior research strategist at Pepperstone, said sustainable yen appreciation will require a change in the fundamentals, probably via a more rapid Bank of Japan tightening cycle, which doesn’t seem on the cards for now.

“It wouldn’t be surprising to see USD/JPY look towards the 160 mark once more, though the timing isn’t right to position for that view, via spot, right now,” he said.