A sheet of newly-designed Japanese 10,000 yen banknotes at the National Printing Bureau Tokyo plant in Tokyo, Japan, on Wednesday, June 28, 2023. Kiyoshi Ota | Bloomberg | Getty Images
The yen was soft after a volatile start on Friday as traders weighed its sharp surge after U.S. consumer prices unexpectedly dropped, stoking speculation that Tokyo had intervened to lift the currency away from 38-year lows.
The Japanese currency swung between gains and losses in early trading before trading slightly weaker. It was last down 0.27% at 159.27 per dollar.
It spiked nearly 3% to as high as 157.40 immediately after the consumer inflation report on Thursday.
Tokyo’s top currency diplomat, Masato Kanda, said on Friday authorities will take action as needed in the foreign exchange market but declined to comment on whether authorities had intervened.
“Currency interventions should certainty be rare in a floating rate market, but we’ll need to respond appropriately to excessive volatility or disorderly moves,” Kanda said.
The usual absence of any official comment on intervention leaves investors guessing and focus will now be on data due at the end of the month that shows whether authorities did step in or not.
News outlet Asahi, citing government sources, said officials intervened in the currency market while a Nikkei report, also citing sources, said the BOJ conducted rate checks with banks on the euro against the yen on Friday, adding to market jitters.
“It’s just being opportunistic … (and) the U.S. data is doing the heavy lifting,” said Moh Siong Sim, currency strategist at Bank of Singapore. “If they did intervene it shows their intention to cap yen weakness.”
Tokyo intervened at the end of April and in early May, spending roughly 9.8 trillion yen ($61.55 billion) to support the currency.
However, the yen has since gone beyond those levels,
