On Friday, the yen strengthened against the dollar, prompting speculation of potential intervention by authorities following a surge in the Japanese currency the previous day. The dollar dropped to a one-month low of 157.30 yen before settling at 158.1 yen, while the euro also saw a decline to 172.04 yen.
The Ministry of Finance in Japan did not provide immediate comments on the situation. Data from daily operations indicated that the Bank of Japan may have spent over 3 trillion yen ($18.85 billion) to defend the currency, marking the second intervention in less than three months.
Analysts observed similarities to official buying but noted that the yen’s appreciation was less significant than the previous day, leading to uncertainty about the involvement of the central bank. Some suggested that it could be a modest intervention, considering the upcoming holiday in Japan.
Despite trading at its weakest level in 38 years, the yen’s fluctuations are influenced by the interest rate differentials between the U.S. and Japan. This makes it lucrative for traders to borrow yen for investments in dollar-denominated assets offering higher returns.
Overall, the yen’s movements continue to attract attention in the global markets, with the possibility of further intervention by Japanese authorities remaining a topic of interest among traders and analysts.