Yen surges on suspected intervention by Japanese authorities

Thursday,   02-May-2024   08:35 AM (IST)

The yen surged against the dollar in early Asian hours on Thursday on what traders suspected was another round of intervention by Japanese authorities to stop a sharp slide in the currency. The dollar fell sharply to precisely 153 yen from about 157.55 yen for reasons that were not immediately clear , but traders and analysts were quick to say it was dollar selling ordered by Japan's Ministry of Finance to support a currency languishing at 34-year lows. The latest move came in a quiet period for the currency pair, after the U.S. stock market had closed and with the Federal Reserve's monetary policy meeting ending hours earlier. The dollar was already on the back foot after Fed Chair Jerome Powell confirmed that the central bank's bias was towards interest rate cuts, even if the timing has been delayed by sticky inflation. The yen has been under pressure as U.S. interest rates have climbed and Japan's have stayed near zero, driving cash out of yen and into higher-yielding assets. The pressure has intensified since March as expectations for Fed rate cuts receded, reinforcing the yen's status as a cheap funding currency. When contacted by Reuters, Japan's vice finance minister for international affairs, Masato Kanda, who oversees currency policy, said he had no comment on whether Japan had intervened in the market. A U.S. Treasury spokesperson declined to comment on the move in the currency pair.