Yen Holds Ground After Rare Coordinated Intervention

The yen has maintained most of its gains from last week's coordinated intervention by Tokyo and Washington. The Japanese currency had rallied as much as 5% over the last three trading sessions, with Japan confirming joint action on Friday with the US in a rare move.

Despite hitting a three-month high of 155.20 the previous session, the yen was down 0.38% at 157.79 per dollar, well above its 40-year low of 163.99 touched in July.

Axel Merk, chief investment officer at Merk Investments, said the joint action appears to be signaling 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. So I think it's about signaling and posturing to tell the market, 'Hey! Don't short the yen so much!' '

The underlying outlook of the yen has not changed, according to BNP Paribas analysts, who believe that despite the unusual nature of multilateral currency interventions, they tend to occur during periods of heightened market volatility.