Yen Surges Nearly 500 Points in an Hour as Markets Suspect Fresh Japanese Intervention
During Thursday's New York trading session, July 30, the yen rose sharply, prompting speculation that Japanese authorities may have entered the market to support the currency. At around 9:30 p.m. Beijing time, coinciding with the U.S. stock-market open, the dollar fell against the yen from around 162.80, breaking successively below the 162, 161, 160, 159 and 158 levels. At around 10:23 p.m. Beijing time, USD/JPY reached an intraday low of 157.97. The pair fell nearly 500 points in less than an hour, while its largest intraday decline reached 3.3%, the biggest one-day drop since December 2023. Calculated from the other side of the exchange rate, the yen's largest intraday gain against the dollar also reached 3.3%. Geoffrey Yu, a senior strategist at BNY Mellon, said, "The price action strongly suggests government intervention, although its effectiveness remains open to question." Noah Buffam, a strategist at CIBC Capital Markets, also said that "the USD/JPY move has the typical characteristics of foreign-exchange intervention." Based on Japan's foreign-exchange-reserve data from the Ministry of Finance, the Japanese government may recently have sold overseas securities, including U.S. Treasuries, to fund intervention in the currency market. Japan spent a record 11.73 trillion yen, or approximately $73.2 billion, on currency intervention between April 28 and May 27 to prevent further yen depreciation. The yen nonetheless remained under significant pressure. The Bank of Japan is scheduled to announce its latest interest-rate decision on Friday, and the market broadly expects the central bank to leave rates unchanged. Although the BOJ has raised its policy rate to its highest level since 1995, the yen has continued to face pressure. Investors are concerned that the BOJ is still moving too slowly in addressing inflation. At the same time, markets continue to see a possibility that the Federal Reserve could tighten monetary policy further this year. The wide gap between Japanese and U.S. government-bond yields continues to weigh on the yen. The day before, the Federal Reserve decided to leave interest rates unchanged, helping the yen rebound. Win Thin, chief economist at Bank of Nassau 1982, said, "Choosing this moment to act was very smart. It was moving with the trend rather than against it." Masayuki Nakajima, a senior strategist at Mizuho Bank's London branch, said, "The last foreign-exchange intervention also took place on the second day after an FOMC meeting ended. The scale of this USD/JPY move is very close to what was seen during the previous interventions."
At around 9:30 p.m. Beijing time, coinciding with the U.S. stock-market open, the dollar fell against the yen from around 162.80, breaking successively below the 162, 161, 160, 159 and 158 levels.
At around 10:23 p.m. Beijing time, USD/JPY reached an intraday low of 157.97. The pair fell nearly 500 points in less than an hour, while its largest intraday decline reached 3.3%, the biggest one-day drop since December 2023. Calculated from the other side of the exchange rate, the yen's largest intraday gain against the dollar also reached 3.3%.
Geoffrey Yu, a senior strategist at BNY Mellon, said, "The price action strongly suggests government intervention, although its effectiveness remains open to question."
Noah Buffam, a strategist at CIBC Capital Markets, also said that "the USD/JPY move has the typical characteristics of foreign-exchange intervention."
Based on Japan's foreign-exchange-reserve data from the Ministry of Finance, the Japanese government may recently have sold overseas securities, including U.S. Treasuries, to fund intervention in the currency market.
Japan spent a record 11.73 trillion yen, or approximately $73.2 billion, on currency intervention between April 28 and May 27 to prevent further yen depreciation. The yen nonetheless remained under significant pressure.
The Bank of Japan is scheduled to announce its latest interest-rate decision on Friday, and the market broadly expects the central bank to leave rates unchanged. Although the BOJ has raised its policy rate to its highest level since 1995, the yen has continued to face pressure.
Investors are concerned that the BOJ is still moving too slowly in addressing inflation. At the same time, markets continue to see a possibility that the Federal Reserve could tighten monetary policy further this year. The wide gap between Japanese and U.S. government-bond yields continues to weigh on the yen.
The day before, the Federal Reserve decided to leave interest rates unchanged, helping the yen rebound. Win Thin, chief economist at Bank of Nassau 1982, said, "Choosing this moment to act was very smart. It was moving with the trend rather than against it."
Masayuki Nakajima, a senior strategist at Mizuho Bank's London branch, said, "The last foreign-exchange intervention also took place on the second day after an FOMC meeting ended. The scale of this USD/JPY move is very close to what was seen during the previous interventions."