(Bloomberg) — The yen abruptly staged its biggest one-day surge since August on speculation that Japanese authorities could be preparing to mount a market intervention to halt the currency\u2019s slide.<\/p>\n
The yen rallied as much as 1.7% to 155.69 per dollar, extending the gains seen during the Asian trading day to its strongest level of the year. The moves reversed what had been a steady slide toward levels last seen in 2024, when Japan stepped in to buy the currency.<\/p>\n
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The jump in the US session came as traders reported that the Federal Reserve Bank of New York had called financial institutions to ask about the yen\u2019s exchange rate. Wall Street saw it as an indication that the bank was preparing to assist Japanese officials to intervene directly in the currency market to prop up the yen. Representatives for the New York Fed declined to comment.<\/p>\n
\u201cNeither US authorities or Japanese authorities seem happy about the value of the yen right now,\u201d said Harvard economics professor Jason Furman, who served as chairman of the Council of Economic Advisers under former President Barack Obama. \u201cEveryone is on hair trigger for something that will change it.\u201d<\/p>\n
<\/p>\n
Japan\u2019s finance minister, Satsuki Katayama, and the country\u2019s top currency official issued fresh warnings to speculators earlier this month after the yen weakened. Japan last intervened in the foreign-exchange markets to support the currency in 2024, when pushed over the 160 level. That was preceded by rate checks.<\/p>\n
Rate checks have often served as a warning to traders that authorities view the currency\u2019s moves as excessive and are ready to buy or sell in foreign-exchange markets to influence the price of the yen. They usually happen when volatility increases and verbal intervention fails to rein in the moves.<\/p>\n
Volatile Moves<\/p>\n
The volatile trading in the yen follows a week of turmoil in the Japanese government bond markets heading into the Bank of Japan\u2019s January policy meeting, at which officials held benchmark borrowing costs steady. The yield on Japan\u2019s 40-year bond rose to its highest mark since its debut earlier this week, prompted by fears of steep government spending under Prime Minister Sanae Takaichi and rising inflation.<\/p>\n
Those concerns have added to angst surrounding the Japanese currency, which earlier this month fell toward the 160-per-dollar mark, a historically weak level closely watched by currency traders around which Japanese authorities have previously stepped in to offer support.<\/p>\n
Story Continues <\/p>\n
\u201cMarket focus on the yen stems from volatility in Japan\u2019s bond market earlier this week,\u201d said Ed Al-Hussainy, global rates strategist at Columbia Threadneedle Investment. \u201cIt is possible that the US Treasury is nervous about spillovers from JGBs to the Treasuries market and is studying currency intervention as a stabilization tool. Whether this risk is material is an open question.\u201d<\/p>\n
But rate checks \u2014 and even actual intervention \u2014 \u201chave historically not had persistent effects,\u201d said Harvard\u2019s Furman. There would need to be \u201ca real policy change for that.\u201d<\/p>\n
What Bloomberg strategists say…<\/p>\n
A \u201cpsychological barrier appears to be forming again. With pressure coming from fiscal uncertainty, rising yields and persistent capital outflows, the path higher for USD\/JPY will get ever narrower.\u201d<\/p>\n
\u2014 Brendan Fagan, Markets Live Strategist. Click here for the full note.<\/p>\n
In September, finance chiefs from the US and Japan reaffirmed in a joint statement their basic commitment to let markets determine currency exchange rates and not to target them for a competitive advantage. They left scope, however, for intervention in certain circumstances in line with previous statements, saying that it should be reserved for dealing with excess volatility or disorderly movements in the currency market.<\/p>\n
\u201cGiven past concerns by the administration about currency intervention, the US seems to be giving Japan the green light if it does need to intervene more forcefully,\u201d said Leah Traub, a portfolio manager at Lord Abbett & Co.<\/p>\n
At BMO Capital Markets, managing director Bipan Rai said the speculation that the New York Fed had conducted a rate-check on the yen drove the currency higher.<\/p>\n
\u201cIt\u2019s also important to note that rate checks in the past haven\u2019t necessarily meant that intervention was imminent,\u201d Rai said. \u201cBut the fact that the NY Fed was asking implies that any potential intervention in dollar-yen won\u2019t be unilateral.\u201d<\/p>\n
The US has only intervened in currency markets on three separate occasions since 1996, according to the New York Fed\u2019s website, most recently selling the yen alongside other Group-of-Seven nations to help stabilize trading after the 2011 earthquake in Japan.<\/p>\n
\u201cIt is plausible that the US would intervene in current circumstances with the shared goal of preventing excessive weakness in the Yen while also hoping to indirectly contribute to stabilizing Japan\u2019s bond market,\u201d according to Evercore ISI economists including Krishna Guha. \u201cIn any event, the fact that US involvement in FX intervention is plausible could speed a sudden unwind of yen shorts even if no such US intervention actually materialized.\u201d<\/p>\n
–With assistance from Miles J. Herszenhorn, Anya Andrianova, George Lei, Ye Xie, Mia Glass, Takahiko Hyuga and Maria Eloisa Capurro.<\/p>\n
Most Read from Bloomberg Businessweek<\/p>\n
\u00a92026 Bloomberg L.P.<\/p>\n","protected":false},"excerpt":{"rendered":"(Bloomberg) — The yen abruptly staged its biggest one-day surge since August on speculation that Japanese authorities could…\n","protected":false},"author":2,"featured_media":254290,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[11],"tags":[1879,1877,114,66103,105763,184,19384,40538,85,48880,46,1437,135063,135064,34131],"class_list":{"0":"post-254289","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-economy","8":"tag-bank-of-japan","9":"tag-bloomberg","10":"tag-business","11":"tag-currency-intervention","12":"tag-currency-market","13":"tag-economy","14":"tag-exchange-rate","15":"tag-federal-reserve-bank-of-new-york","16":"tag-il","17":"tag-intervention","18":"tag-israel","19":"tag-japan","20":"tag-japanese-authorities","21":"tag-jason-furman","22":"tag-new-york-fed"},"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/il\/wp-json\/wp\/v2\/posts\/254289","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/il\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/il\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/il\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/il\/wp-json\/wp\/v2\/comments?post=254289"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/il\/wp-json\/wp\/v2\/posts\/254289\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/il\/wp-json\/wp\/v2\/media\/254290"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/il\/wp-json\/wp\/v2\/media?parent=254289"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/il\/wp-json\/wp\/v2\/categories?post=254289"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/il\/wp-json\/wp\/v2\/tags?post=254289"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}