Yen Surges Sharply Against the Dollar

The Japanese yen climbed sharply against the dollar on Wednesday, recovering some ground after giving back about half of the gains it made following a rare joint intervention by the United States and Japan at the end of July.

The reason for the latest rise was not immediately clear. The yen had fallen to 163.98 per dollar, its weakest level in 40 years, before the intervention. It then strengthened to 155.21 before retreating slightly. On Wednesday, it gained 0.92% to 158.72 per dollar.

Chris Scicluna, head of economic research at Daiwa Capital Markets, described the move as large and decisive. He said the timing could be appropriate for the United States or Japan to review interest rates following comments from the Bank of Japan earlier in the day.

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It is a large and decisive move, and the timing could be appropriate for the United States or Japan, at least, to review interest rates, following the Bank of Japan’s comments this morning.

Hajime Takata, a Bank of Japan board member known for favoring tighter monetary policy, said the central bank should take a flexible approach to raising rates in response to inflationary pressure. Markets had expected a fixed six-month pace of increases.

“It is difficult to determine the reason for the dollar’s move against the yen, but I think this is probably just a reassessment of interest rates, rather than intervention to change the trend, because the last intervention failed to do that,” Scicluna said.

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It is difficult to determine the reason for the dollar’s move against the yen, but I think this is probably just a reassessment of interest rates, rather than intervention to change the trend, because the last intervention failed to do that.