The yen jumped more than 2% against the U.S. dollar on Thursday, touching 155.28 per dollar, its strongest level in a month. Market watchers say the move is more likely tied to rising bets on a Bank of Japan rate hike this month than to fresh Japanese intervention.
Yen touches a one-month high
The yen strengthened sharply Thursday, touching 155.28 per dollar at one point, according to LSEG data. That marks its strongest level against the dollar since Aug. 3, shortly after the U.S. and Japan staged a joint intervention on July 31. The yen was trading at 155.40 per dollar and also rose against the euro and British pound.
According to Reuters, Japan's Vice Finance Minister for International Affairs Atsushi Mimura said authorities were "neither satisfied nor reassured" by the recent moves and remain on a state of heightened alert.
Intervention speculation lingers
Thursday's jump follows a similar 1% spike in the yen on Wednesday, which fueled speculation that Japanese authorities had staged another round of intervention. The currency had crossed the 160-per-dollar mark earlier in the week, a threshold often seen as increasing the chance of intervention.
Japan spent a record 15.4 trillion yen ($98 billion) to boost the yen between July 30 and Aug. 26, according to its finance ministry, and the U.S. separately confirmed it took part in a coordinated yen-buying effort in late July. Washington has not disclosed the exact amount it spent.
Chief economist Takuji Okubo of Japan Macro Advisors said it is "possible" Thursday's move represented further intervention, but he said the finance ministry has not previously carried out this kind of small stealth intervention. He instead pointed to comments from Bank of Japan Governor Kazuo Ueda cementing the high likelihood of a rate hike this month.
Rate-hike bets build ahead of BOJ meeting
The Bank of Japan makes its next policy decision on Sept. 18, with a rate hike increasingly priced in by markets. BOJ board member Hajime Takata said this week the central bank should hike rates nimbly in response to rising inflation, and he suggested moves could come faster or bigger than its recent semiannual pace. Ueda has kept the door open to higher rates in his own comments.
ING's Chris Turner noted that expectations for a Federal Reserve rate hike this month would likely keep the dollar supported against the yen. He added that a sustainable rise in the yen probably requires a much more hawkish Bank of Japan alongside new initiatives to encourage domestic investment in Japan.
Source: CNBC
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