Yen rises as ​traders brace for possible intervention

The ‌yen rally helped knock the dollar down against its peers

The yen rose sharply against the dollar on Thursday as ​traders braced for possible intervention from Japanese authorities, which signalled a new approach to bolstering the weak currency.

The ‌yen rally helped knock the dollar down against its peers.

It was not immediately clear ​what drove the move. Traders and strategists offered differing opinions, with some speculating authorities ​had checked rates in the market, prompting jitters in the currency.

The yen has been trading at its ⁠lowest in 40 years, with the dollar bolstered by interest rates that are well above Japan’s, and the AI stock market boom.

Sources told Reuters Japanese ​officials were abandoning their habit of telegraphing intervention risks, instead signalling a more targeted campaign to squeeze speculators and raise the cost of betting against ​the yen.

Officials were also avoiding any suggestion of a specific “line in the sand” exchange-rate level that would trigger action, in a more aggressive approach aimed at keeping traders guessing.

We will have to wait for data to ascertain if this was intervention, but the timing of the move does suggest that it was, said Abbas Keshvani, Asia macro ​strategist at RBC Capital Markets in Singapore.

We can get more intervention. They have communicated that they wish to be more nimble in their intervention, rather ​than defend a specific line in the sand. So, their new approach allows them to intervene more frequently, he said.

The dollar index dropped 0.4% to 100.98.

It hit a one-year high of 101.8 last week as strong economic and inflation data caused traders to raise their bets on U.S. central bank rate hikes.