Yen Holds Gains After Rare Coordinated Intervention by Japan and US

The yen held most of its gains after Tokyo and Washington's rare coordinated intervention last week. The Japanese currency had rallied as much as 5% over three trading sessions, with Japan confirming joint action with the U.S. to buy yens for euros instead of selling dollars.

According to Axel Merk, chief investment officer at Merk Investments, this move is about signalling and posturing to tell the market not to short the yen so much. He noted that interventions in currency markets have a limited impact in the medium term.

The underlying outlook for the yen has not changed, but multilateral interventions tend to occur during periods of heightened market volatility. BNP Paribas analysts led by Ishan Gurnani said they are not yet convinced and still believe USDJPY will end the year higher than current levels.