Investing.com – The Japanese yen strengthened on Friday, with the USDJPY hitting a three-week low after a sharp decline this week that traders largely blamed on government intervention.
The pair, which measures the amount of yen needed to buy one dollar, traded down 0.2% at 153.34 yen. It fell to 152.9 on Thursday, hitting its lowest level since mid-April.
USDJPY fell sharply this week amid growing evidence that the Japanese government intervened in markets on at least three separate occasions – on Monday, Wednesday and Thursday.
The proposed intervention comes after USDJPY rose to 160 earlier in the week, which traders said was a new line in the sand for the yen. The Japanese currency started the week at its lowest level since 1990.
The factors that had put pressure on the yen ahead of this week were still in place. Recent comments from the US Federal Reserve have heightened expectations that interest rates will remain high for a long time.
The widening gap between US and Japanese rates has been a key pressure point on the yen, and the Bank of Japan’s historic rate hike in March did little to ease that pressure.
The Bank of Japan also offered moderate signals of future rate hikes during its late April meeting, which triggered the yen’s recent period of weakness.
While Japanese government officials did not directly confirm this week’s intervention, Reuters estimated Japan may have spent between 3.66 and 5.5 trillion yen ($23.59 billion to $35.06 billion) during Monday’s market intervention , according to the Bank of Japan.
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