Yen Jumps Against Dollar Amid Speculation of Japanese Intervention

The yen surged against the dollar on Thursday in a rapid and large move that alerted investors to the prospect of intervention by Japan to prop up its weak currency. The dollar/yen fell to as low as 157.8 and was last trading at 158.61, down 2.5% on the day.

Markets have been on alert for yen-buying by Japanese authorities, who have warned of action for months as currency weakness exacerbates the cost-of-living impact of rocketing energy import prices. The yen has traded near 40-year lows against the dollar, pressured by Japan's relatively low interest rates and as higher energy prices hit the nation's terms of trade.

Daisaku Ueno, chief FX strategist at Mitsubishi UFJ Morgan Stanley Securities in Tokyo, said it is hard to imagine anything other than currency intervention causing a drop of as much as 5 yen in such a short period of time. However, whether this will shift the trend toward a stronger yen remains doubtful.