LONDON – The yen jumped suddenly against the US dollar on July 2, with traders alert to the prospect of intervention from Japan to prop up its stubbornly weak currency.
The Japanese currency rose as much as 0.9 per cent to 161.115 per dollar and was last trading at 161.85, up 0.45 per cent.
It was not immediately clear what drove the market move or whether Japanese authorities were in the market. It appeared smaller than that after previous bouts of intervention.
“I think it (dollar/yen move) is jittery price action,” Derek Halpenny, head of research for global markets EMEA at MUFG in London.
“We have payrolls and a holiday, liquidity conditions will be thin, so markets are nervous about potential intervention,” he said, referring to key US jobs data due later in the day before a US public holiday on July 4.
Sources told Reuters Japanese officials are abandoning their habit of telegraphing intervention risks, instead signalling a more targeted campaign to squeeze speculators and raise the cost of betting against the battered yen.
Officials are also avoiding any suggestion of a specific “line in the sand” exchange-rate level that would trigger action.
The yen crossed the 162 per dollar level on June 30 to its weakest in 40 years, pressured by Japan’s relatively low interest rates.
It received little help from a well-telegraphed Bank of Japan rate hike and an interim ceasefire between the United States and Iran, and no lasting boost from a record 11.7 trillion yen (S$93.3 billion) intervening in foreign exchange markets between late April and early May.
The yen has unwound all of its gains since Japan last intervened, pressured by persistent dollar strength and growing expectations of a Federal Reserve rate hike in 2026, while the BOJ is expected to maintain its gradual approach to policy tightening.
