Yen Gives Back Gains After US-Japan Intervention

The yen showed signs of weakness on Tuesday after the rare joint currency intervention by Japan and the United States last week. The Japanese currency had gained as much as 5% across the last three trading sessions, reaching a three-month high of 155.20 in the previous session.

However, it gave back some of its advance, trading down 0.25% at 157.56. Despite this slight drop, the yen remains well above its 40-year low of 163.99 reached in July.

Axel Merk, chief investment officer at Merk Investments, noted that joint actions by Japan and the U.S. aim to signal to the market not to short the yen. 'As most people would agree that interventions in the currency markets have a limited impact in the medium term,' he said, 'so I think it’s about signalling and posturing to tell the market, ’Hey! Don’t short the yen so much!’'

The intervention seems to be having some effect, as Axel Merk pointed out. The US dollar index fell 0.33% to 181.36, down from Monday’s almost nine-month high of 179.435.