The dollar was down 1.2% against the yen at 156.48, the euro was last down 0.8% at 171.15 yen, while sterling was down 0.76% at 203.75 yen
The yen gained sharply on Wednesday in what traders suspected was likely the result of yet another intervention from Japanese authorities to prop up the battered currency from multi-decade lows.
The dollar was last 1.2% lower against the yen at 156.48, extending its sudden drop against the Japanese currency shortly after the London trading session began.
The dollar’s decline against the yen happened at a more measured pace than in earlier bouts of intervention, which led traders to initially attribute the move to the unwinding of carry trades.
However, the scale of the decline left markets alert to the possibility of another yen-buying intervention from Tokyo, after authorities had likely done so last week.
Current valuations are still stretched and the yen is still undervalued, so a bit more activism in forex markets from Japan is the way to correct any misalignments, according to Geoff Yu, senior macro strategist at BNY Mellon in London.
But we have to wait for an official confirmation, he added.
The yen also made outsized gains against other currencies. The euro was last down 0.8% at 171.15 yen, while sterling dropped 0.76% to 203.75 yen.
Japan’s top currency diplomat Masato Kanda said he would have to respond if speculators cause excessive moves and that there was no limit to how often authorities could intervene, according to Kyodo News.
BoJ data released on Tuesday suggested Tokyo may have spent 2.14 trillion yen ($13.5 billion) by stepping into the currency market on Friday last week.
Combined with the estimated amount spent a day earlier, Japan is suspected to have bought around 6 trillion yen via intervention last week.
