Yen Shows Notable Volatility Following Another Intervention by Japanese Authorities

After the yen (JPY) hit a 32-year low near 152 to the dollar on Friday, Japanese authorities intervened in the foreign exchange market to buy yen for the second time in a month, a government official and another person familiar with the situation told Reporters.

In an effort to combat a global trend of tightening monetary policy and expanding the gap between the US and Japanese interest rates, Japan’s government has been making efforts to support the bruised yen, while the Bank of Japan (BoJ) maintains ultra-low interest rates.

Dollar/Yen Pair Taps Multi-Decade High

The intervention caused the dollar to rise to 151.94 against the yen, its highest level since 1990, before rapidly collapsing below the 144.50 mark, losing over 3.5%.

According to sources familiar with the topic, the Ministry of Finance (MOF) started to step in gradually around the mid-London session on Friday.

Commenting on the topic, after a meeting with Anthony Albanese of Australia, Japanese Prime Minister Fumio Kishida told reporters: “We are maintaining our stance of being ready to take appropriate action against excessive forex volatility,” asserting that the volatility seen in the currency is intolerable.

When questioned about Friday’s action, Kishida declined to speak further, stating, “I will not make any detailed comments on forex.”

Likewise, Masato Kanda, Japan’s senior currency ambassador, refrained from confirming if the MOF had intervened.

The MOF has maintained this position for the past few weeks, Kanda, the vice finance minister for international affairs, said in a statement to Reuters on Saturday. “We won’t comment now on whether or not we conducted an intervention,” he added.

He also indicated a potential “stealth intervention” to wage a psychological battle against investors selling the yen by saying that the government would not confirm whether an intervention had occurred for a while.