Yen Jumps as Traders Watch for Further Intervention

The Japanese yen surged on Monday, reaching its strongest level in about three months, as traders anticipated further intervention from authorities to support Japan's historically weak currency. The yen jumped by as much as 1% against the US dollar, peaking at 155.20 per dollar before paring some gains. It was last 0.7% higher at 156.46.

Hirofumi Suzuki, SMBC's chief FX strategist, noted that the possibility of intervention cannot be ruled out given the magnitude and timing of Monday's move. A trader, who declined to be named, said there was a huge unwinding of yen shorts on Monday.

The yen's jump followed a more than 3% surge over two trading sessions at the end of last week, which included joint yen-buying intervention with the US on Friday. Bank of Japan data showed Tokyo may have bought as much as $58.97 billion worth of yen on Thursday.

Goldman Sachs analysts said that encouraging repatriation would be the most powerful policy for influencing the currency over a long period of time, outside of a change in either the policy mix or global growth outlook.