Yen Soars Against Dollar as Tokyo Suspected of Currency Intervention

The Japanese yen surged against the US dollar on Thursday, with analysts suspecting official intervention by Tokyo to prop up its currency. The yen's move was the largest since 2022, with the dollar falling as much as 3% to 158.34 yen. This comes after the U.S. Federal Reserve left interest rates unchanged on Wednesday, which bruised the dollar as traders questioned whether the Fed's new chief was serious about containing inflation.

Currency analysts said a backdrop of month-end positioning, weak U.S. economic data, and a broadly soft dollar may have provided Japan with a good opportunity to support its embattled currency. The Japanese finance ministry's foreign exchange division could not be reached for comment on whether Tokyo had intervened in the market.

Some analysts noted that previous Japanese currency intervention had been conducted on the day after the Fed meeting, and suggested that this may have been another instance of official intervention. Mizuho Bank senior strategist Masayuki Nakajima said that between 0930 and 0940 ET (1330 GMT) their eTrading desk recorded an estimated $8.1 billion worth of dollar/yen selling across core currency trading venues.

The yen also jumped over 2% against the euro, pound, and Australia's currency, with some analysts warning that traders should be cautious about the potential for further rate hikes by the Bank of Japan on Friday.