Yen Slides Back Upward, Markets Eye Further Intervention

The yen-dollar exchange rate has begun to rise again after joint US-Japan foreign exchange intervention. The yen, which had halted its sharp rise following the intervention, is climbing towards 158 yen per dollar in the Tokyo foreign exchange market. Bloomberg analysts suggest that the effect of the US-Japan coordination is fading quickly.

Markets are closely watching whether further intervention will take place, with authorities in the United States and Japan repeatedly expressing their willingness to continue defending the yen if necessary. Christopher Wong, a foreign exchange strategist at OCBC in Singapore, explained that 'As the dollar-yen rate approaches 160 yen, the possibility of further intervention is very high.' However, he added that for it to be effective, it must be backed by rapid rate hikes from the Bank of Japan or expectations of monetary easing from the US Federal Reserve.

The Japanese government has already carried out its largest-ever foreign exchange intervention on April 30, buying yen and selling dollars to prevent the yen's sharp weakness. The government bought a record 6.2787 trillion yen (about 56.2 trillion won) on this day, which is the largest single-day yen-buying, dollar-selling intervention on record.