Dollar rises to upper 156 yen zone amid wariness over intervention

Financial data screens in Tokyo show the U.S. dollar trading in the lower 156 yen range on April 30, 2024.

The U.S. dollar rose to the upper 156 yen range Tuesday morning in cautious Tokyo trading, a day after Japanese authorities were suspected to have stepped in to push the Japanese currency sharply higher after its drop to a new 34-year low.

The dollar extended gains toward the 157 yen line as expectations the U.S.-Japan interest rate gap will remain wide for the foreseeable future more than offset fears of intervention, dealers said.

At noon, the dollar fetched 156.72-73 yen compared with 156.30-40 yen in New York at 5 p.m. Monday.

The euro was quoted at $1.0706-0707 and 167.78-81 yen against $1.0716-0726 and 167.33-43 yen in New York late Monday afternoon.

The dollar may move to retest its upside toward 160 yen if market players do not see clearer signs the Bank of Japan will raise interest rates or the U.S. Federal Reserve indicates it will cut, Masahiro Ichikawa, chief market strategist at Sumitomo Mitsui DS Asset Management, said.

The dollar on Monday topped the 160 yen threshold for the first time since April 1990 but quickly fell back to as low as the 154 yen level.

The yen’s substantial rebound raised speculation that Japanese authorities conducted a yen-buying, dollar-selling operation to halt the yen’s decline. Financial markets in Tokyo were closed Monday for a national holiday.

Masato Kanda, vice finance minister for international affairs, declined to say whether there was an intervention on Monday but said the Japanese government stands ready to act whenever “appropriate.”

“The moves have been excessive and led by speculators,” Kanda told reporters, adding that the negative impact of such rapid fluctuations on the economy “cannot be tolerated.”

Sumitomo Mitsui’s Ichikawa believes the authorities stepped into the market on Monday.

“While (the suspected intervention) briefly halted the yen’s rapid slide, it is still considered comparatively weak,” Ichikawa said.

The Japanese currency has been under heavy selling pressure after the Bank of Japan on Friday decided to leave its monetary policy unchanged at a policy board meeting.

On the stock market, the Nikkei index briefly rose over 600 points in the morning, led by exporters that were boosted by the yen’s weaker tone against the dollar. Solid gains in the tech sector also helped lift the stock market, analysts said.

The 225-issue Nikkei Stock Average rose 524.25 points, or 1.38 percent, from Friday to 38,459.01. The broader Topix index was up 54.06 points, or 2.01 percent, at 2,740.54.