Yen Weakens Amid Intervention Fears as Fed Hikes Rate

The Japanese yen weakened on Monday after volatility late last week put traders on alert for possible currency intervention, while a series of rate hikes and hawkish signals from central banks helped to strengthen the US dollar.

Traders stayed vigilant for signs of Tokyo stepping into the market as Japanese markets were closed for a three-day holiday, leading to low liquidity. The US dollar rose 0.2 percent against the yen to 157.20 yen.

The Bank of Japan (BOJ) raised rates on Friday to their highest level in 31 years, 1.25 percent, but two dissenting votes and a lack of explicitly hawkish guidance left investors reluctant to buy the currency.

Following the decision, the yen fell sharply before a slight rebound as the Nikkei newspaper reported that Japanese officials had conducted rate checks, often seen as a precursor to currency intervention.