The Japanese yen remained under pressure against the U.S. dollar on Monday as currency markets turned their attention back to the possibility of intervention by Japanese authorities following last week’s sharp decline.
The yen traded around 156.85 per dollar in Asian dealings after losing roughly 2% over the previous week. Trading conditions were relatively thin as Japanese financial markets were closed for a three-day holiday, adding to concerns about potentially sharper currency moves.
The renewed weakness came despite the Bank of Japan raising its benchmark interest rate to 1.25%, the highest level in 31 years. While the rate increase had been widely expected, two dissenting votes and the absence of stronger guidance on future tightening limited support for the Japanese currency.
Attention has also turned to reports that Japanese officials conducted rate checks, in which authorities contact market participants to obtain current currency prices. Such moves are closely watched because they have historically preceded direct intervention in the foreign exchange market.
The yen’s performance is also being shaped by developments outside Japan. The U.S. Federal Reserve and European Central Bank both raised interest rates this month and signaled that additional tightening could be required as policymakers continue responding to inflation pressures.
With USD/JPY remaining close to levels that have previously prompted official action, traders are watching both Japanese authorities and global interest-rate expectations for the next direction in the currency market.
