Economic Updates
By Rae Wee, Vidya Ranganathan
(Reuters) -The yen jumped suddenly against the dollar on Monday, with traders citing yen-buying intervention by Japanese authorities to try to underpin a currency languishing at levels last seen over three decades ago.
The dollar fell sharply to a low of 154.40 yen from as high as 160.245 earlier in the day. Banking sources said Japanese banks were seen selling dollars for yen. It was last trading at 155.83 yen.
Traders had been on edge for weeks for any signs of action from Tokyo to prop up a currency that has fallen 11% against the dollar so far this year. The yen plunged to 34-year lows even though the central bank exited from negative interest rates in a historic move last month.
Currency traders have bet that despite the change, Japanese rates will remain low for some time in contrast to relatively high U.S. interest rates.
Japan’s top currency diplomat Masato Kanda declined to comment when asked if authorities had intervened, but said the current developments in the currency market were “speculative, rapid and abnormal” and could not be overlooked.
Japan’s Ministry of Finance (MOF) was not immediately available for comment, with markets in the country closed for a holiday on Monday.
“Today’s move, if it represents intervention by the authorities, is unlikely to be a one-and-done move,” said Nicholas Chia, Asia macro strategist at Standard Chartered (OTC:SCBFF) Bank in Singapore.
“We can likely expect more follow through from MOF if the dollar/yen pair travels to 160 again. In a sense, the 160-level represents the pain threshold, or new line in the sand for the authorities.”
