Traders are on alert at the prospect of an intervention from Tokyo to stem the decline in the Japanese currency after the yen weakened to a weak level of 159.2 per dollar, near an 18-month low, during a news conference by Bank of Japan Governor Kazuo Ueda after the BOJ kept interest rates steady.“Given the lack of news, the only thing I can really see is the underlying bearish sentiment fear of intervention,” said Marc Chandler, chief market strategist at Bannockburn Capital Markets.
Shortly after Ueda’s press conference, the yen suddenly strengthened to 157.3 per dollar, although the loose market consensus was that authorities had not intervened directly but had implemented interest rate controls at banks. A tariff check – asking what price it would get if it intervened – is something Japanese authorities could use to signal their willingness to enter the market.
“It’s late in the week… and no one has a good idea of what’s going on. I think that makes it a little more anxious to make a move,” said Erik Bregar, director of FX & precious metals risk management at Silver Gold Bull.
The yen has been under relentless pressure since Sanae Takaichi took power as Japan’s prime minister in October. It fell by more than 4% due to budgetary concerns and hovered near levels that led to verbal warnings and fear of interventions. Bond market turmoil this week underlined investor nerves over Japan’s fiscal position as Takaichi called early elections for February and promised tax cuts, sending Japanese government bond yields to record highs. They have since recovered somewhat, but investors remain skittish.
DOLLAR SALES MOMENTUM
Elsewhere, the dollar was set to suffer its steepest weekly decline since June as geopolitical tensions unsettled investors.
US President Donald Trump said on Wednesday he had secured US access to Greenland in a deal with NATO, which came as he withdrew tariff threats against Europe and ruled out taking Denmark’s autonomous territory by force.
The dollar bore the brunt of investor fears in currency markets as US assets came under pressure at the start of the week amid rising geopolitical tensions, reviving the ‘Sell America’ trade debate that emerged in the wake of Trump’s sweeping Liberation Day tariffs last April.
The dollar index, which measures the U.S. currency against six units, was last weaker at 97.571. The price was on track for a weekly decline of more than 1%, the steepest since June.
The euro was last up 0.5% at $1.181, expecting a weekly gain of more than 1%. The French government survived two votes of no confidence on Friday, with more expected after Prime Minister Sebastien Lecornu said he was appealing to the constitution to force the spending part of the 2026 budget law through parliament.
Meanwhile, sterling stood at $1.362. Data released on Friday showed UK retail sales rose unexpectedly in December, but this had little effect on the pound.
#Yen #Sees #Sudden #Spikes #Speculation #Rate #Controls #Increases