Japanese Yen Sees Biggest Surge in Years

On Thursday, July 30, the Japanese yen rose against the dollar by almost 3%, posting one of the strongest single-day moves in recent years. The rate briefly fell below 158 yen per dollar from around 163 yen.

Later, the Japanese currency gave up some of its gains and was strengthening by about 2.5%. Traders noted a sharp increase in trading volumes and speculated that the move could be linked to intervention by Japanese authorities in the currency market.

The Ministry of Finance and the Bank of Japan did not confirm they had conducted an intervention. Official data does not allow an immediate determination: Japan's Ministry of Finance publishes the total amount of foreign exchange operations once a month, and plans to release the figures for the period from July 30 to August 26 on August 28.

The sharp strengthening came after a prolonged slide in the yen. It had previously slipped below 163 yen per dollar—the weakest level in about 40 years. Japan's Finance Minister warned that the authorities stand ready to take decisive action in the face of excessive currency swings.

The yen received additional support from a weakening of the dollar after the release of weaker-than-expected US economic growth data. The dollar index fell about 0.8% on Thursday.

Investors are also awaiting the outcome of the Bank of Japan's meeting, taking place on July 30–31. The central bank holds its key interest rate at around 1%, but market participants will be searching its statements for signals of a possible further increase in borrowing costs.

Based on materials from: Financial Times, Japan Ministry of Finance