Yen Volatility Triggers Intervention Watch Amid Global Rate Hikes

The yen has become increasingly volatile in recent days, prompting speculation about potential intervention from Tokyo. The currency dropped 2% last week and was trading at 156.64 per US dollar on Monday, after Japan's markets closed for a three-day holiday.

Despite the Bank of Japan raising rates to their highest level in 31 years, the move failed to boost the yen, with two dissenting votes and a lack of explicitly hawkish guidance disappointing investors.

The BOJ's decision has been viewed as a precursor to currency intervention, with traders watching for an official rate check. A rate check involves authorities asking banks for currency quotes to gauge market conditions.

Fred Neumann, chief Asia economist at HSBC, said the BOJ's messaging has become harder due to the Fed delivering a hawkish signal with its unanimous decision to raise its policy rate.