Japan Intervenes Again to Support Yen Amid Rising Pressure

The yen surged to its highest level in over two years against the US dollar after Japan's Nikkei newspaper reported that officials intervened in the market again. The currency jumped by as much as 3.3% versus the dollar, the most on an intraday basis since December 2023. According to Geoffrey Yu, a senior strategist at BNY, 'the scale of the move strongly suggests intervention.' However, he added that 'efficacy remains in question.'

Nikkei cited market participants as saying that Japan's government and Bank of Japan intervened in the foreign-exchange market, with US authorities also requesting quotes on the dollar-yen rate. The Japanese Finance Ministry officials were unable to immediately comment, while representatives for the US Treasury did not respond.

The yen has been under pressure due to rising oil prices, persistent budget deficits, and a wide interest-rate gap between Japan and the US. Despite the Bank of Japan spending a record ¥11.73 trillion buying the currency in the open market last quarter, the yen has continued to weaken. This move comes ahead of the BOJ's next policy decision on Friday, where policymakers are expected to hold rates after last month's hike.