The yen rallied sharply on Monday amid speculation that authorities may have intervened to prop up the currency again after coordinated action between the US and Japan last week.
The Japanese currency swung from a small decline to gain as much as 1.4% versus the dollar during morning trading in Tokyo. It then pared a large chunk of the move to trade around 156.70 per dollar during the London session, raising the prospect that jittery traders or algorithms may also have been the cause.
“The price action alone looks like intervention,” said Gareth Berry, a strategist at Macquarie Group Ltd. in Singapore. “The Ministry of Finance has a limited window of opportunity to do some damage on the USDJPY chart, and crack some support levels.”
Under the International Monetary Fund’s framework, a currency may be classified as free-floating if official intervention is limited to no more than three episodes over a six-month period, with each episode lasting no more than three business days. By that standard, Japan could intervene again on Monday, following its market operations on Thursday and Friday.Play Video
Japan and the US Treasury Department are now working together to a degree unseen in decades to shore up the currency, raising the stakes for anyone betting against it. Treasury Secretary Scott Bessent said the US wouldn’t hesitate to step into the market again. President Donald Trump added his stamp of approval to the recent action, describing the intervention as “a signal of friendship.”
