Yen Strengthens Briefly as Traders Eye Intervention Risk

The Japanese yen briefly strengthened against the US dollar on Friday, but traders remain alert to the risk of intervention after Tokyo's authorities stepped into markets for the first time in three months.

The Bank of Japan kept interest rates steady on Thursday, but warned that underlying inflation could exceed its target, signaling further rate hikes. The yen had slumped to four-decade lows, threatening to worsen living costs hit by the Iran war-driven energy shock.

A market source said Japan conducted yen-buying, dollar-selling intervention in New York trading hours on Thursday. The move was smaller than Thursday's 2.4% plunge in the US dollar to as low as 157.8 yen after suspected intervention.