Ray V and Vidya Ranganathan
(Reuters) – The yen suddenly jumped against the dollar on Monday as traders cited Japanese authorities’ yen-buying intervention to prop up the currency, which is languishing near 34-year lows.
The dollar fell sharply to 156.55 yen from 160.245 earlier in the day. Trade sources said Japanese banks were selling dollars for yen.
Traders were on edge for any sign of Tokyo moving to prop up the currency, which has fallen 11% against the dollar this year as even a historic exit from negative rates failed to lift the currency.
Japan’s Finance Ministry was not immediately available for comment as Japan closed for the weekend on Monday.
Bank of Japan Governor Kazuo Ueda said at a news conference after last week’s meeting that monetary policy does not directly target exchange rates, although exchange rate volatility can have significant economic consequences.
Japan intervened in the foreign exchange market three times in 2022, selling the dollar to buy the yen, first in September and then in October when the yen fell to a 32-year low of 152 per dollar.
The yen came under pressure as interest rates in the United States rose and remained near zero in Japan, pushing cash out of the yen and into dollars to earn so-called carry.
Earlier this month, the United States, Japan and South Korea agreed to “consult closely” on currency markets in a rare warning, with Tokyo following its rhetoric against the yen’s excessive moves.
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The yen also hit multi-year lows against the euro, Australian dollar and US dollar.