By Rae Wee and Vidya Ranganathan
(Reuters) – The yen suddenly rose against the dollar on Monday, with traders citing intervention by Japanese authorities to buy the yen to boost the currency languishing near a 34-year low.
The dollar fell sharply to 156.55 yen, down from 160.245 earlier in the day. Trade sources said Japanese banks were selling dollars for yen.
Traders have been on alert for signs of action from Tokyo to prop up a currency that has fallen 11% against the dollar so far this year, as even a historic exit from negative rates has failed to to lift coin.
Japan’s finance ministry was not immediately available for comment as Japan was closed for a public holiday on Monday.
Bank of Japan Governor Kazuo Ueda said at a news conference after a meeting last week that monetary policy does not directly target currency rates, although exchange rate volatility could have significant economic consequences.
Japan intervened in the foreign exchange market three times in 2022, selling the dollar to buy the yen, first in September and again in October, as the yen fell to a 32-year low of 152 per dollar.
The yen is under pressure as US interest rates have risen and Japan’s have remained near zero, pumping cash out of the yen into dollars to earn so-called carry.
The United States, Japan and South Korea agreed earlier this month to “close consultations” on currency markets in a rare warning, and Tokyo has taken action with its rhetoric against excessive yen moves.
The yen has also hit multi-year lows against the euro, Australian dollar and Chinese yuan.
(Reporting by Reuters Markets team; Editing by Neil Fullick)
