Foreign Currency

Yen Surges 3% in Minutes as Traders Speculate About Intervention

(Bloomberg) — The yen advanced more than 3% against the dollar late in New York, fueling speculation that the Japanese authorities intervened for a second time this week to support the currency after a prolonged bout of weakness.

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The yen sharply strengthened from a level of around 157.58 per dollar to as strong as 153.04, as more than $4 billion of yen-related futures were exchanged in the last trading hour of the day. That was the largest number of contracts since February 2, according to volumes data recorded by CME.

“From the price action, it’s similar to an intervention move,” said Yusuke Miyairi, a currency strategist at Nomura International Plc.

Japan probably intervened on April 29 when the yen weakened beyond 160 for the first time in 34 years, spending about ¥5.5 trillion ($34.8 billion) to support the currency, based on Bloomberg analysis of commercial banks’ deposits held at the BOJ.

Official figures due on the last day of the month will show whether Japan bought or sold yen this week. The US Treasury didn’t immediately respond to a request for comment.

While some past cases of extreme moves in the yen have been attributed to algorithmic trading, the combination of the spike at the end of the trading day when liquidity is usually thinner could provide an opportune moment for the Japanese to act.

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“Illiquid conditions close to end of day provided a good environment for another move to be effective,” said Helen Given, a foreign-exchange trader at Monex. “That 2-yen move, again, is what traders usually keep an eye on as an indication of possible intervention.”

The latest slump for the currency came after the conclusion of the Federal Reserve’s policy meeting, at which officials held interest-rates steady, where they’ve been since July of last year.

The dollar pared losses against other Group-of-10 currencies. The more-than-3% advance for the yen was the currency’s largest intraday gain since December 2023.

–With assistance from Robert Fullem, George Lei and Masaki Kondo.

(Adds updates throughout)

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