The yen surged against the dollar on Monday, catching traders off guard as Japanese authorities intervened to bolster the currency, which has been hovering near 34-year lows. The dollar plummeted to 155.01 yen from a high of 160.245 earlier in the day, with reports indicating that Japanese banks were selling dollars for yen.
Market watchers had been anticipating action from Tokyo to support the yen, which has already weakened by 11% against the dollar this year despite efforts to lift it from historic lows. The sudden and significant move towards intervention by Japanese authorities took many by surprise, especially on a day when Japan was observing a public holiday with low liquidity.
Experts weighed in on the situation, with some suggesting that the intervention could be a signal to speculators that enough is enough, while others pointed out the risks and potential effectiveness of such actions given the current market dynamics.
The move by Japanese authorities to intervene in the currency markets during a holiday underscores the seriousness of the situation and the determination to stabilize the yen. As the week progresses with key events like the FOMC meeting and payroll data on the horizon, the impact of this intervention and the future direction of USD-JPY exchange rates remain uncertain.
Overall, the unexpected intervention by Japanese authorities has injected volatility into the currency markets and raised questions about the effectiveness of such measures in the face of wider economic factors influencing exchange rates.