Yen Steadies After Sharp Decline Amid Intervention Concerns

The Japanese yen stabilized on Monday following a sharp decline last week that sparked intervention concerns. The currency had dropped 2% in the previous week and was trading at 156.85 per US dollar.

Japanese markets were closed for a three-day holiday, leading to low liquidity and keeping traders alert for an official intervention. However, despite expectations of higher interest rates from the Bank of Japan, the yen did not experience a significant boost following the BOJ's decision on Friday to raise its benchmark rate to 1.25%, its highest level in 31 years.

The BOJ's move was widely expected, but two dissenting votes and a lack of explicitly hawkish guidance disappointed investors. As a result, the yen plummeted before reports emerged that Japanese officials had conducted rate checks, often seen as a precursor to currency intervention.