Yen Volatility: Japan's top currency official declines to say if it intervened

Kanda spoke after the yen surged from the weakest levels in a year amid speculation Japanese officials acted to slow the currency’s slide.

The yen reached 150.16 per dollar on Tuesday in New York trading, its cheapest since multi-decade lows were set in October 2022, as a report showing US labor demand remains resilient pushed Treasury yields higher.

The currency then soared nearly 2 percent in a matter of seconds to as strong as 147.43. It traded at around 149.14 early in the Tokyo session Wednesday and was largely unchanged following Kanda’s comments.

While Japanese officials have warned for months they would step in if they saw excessive volatility, Tuesday’s sharp yen rebound came with the currency down just 0.2 percent against the dollar. That suggested that the breach of the psychological level of 150 per dollar was the key catalyst behind the move.

Japan appeared to switch its communications approach on intervention last year. While Finance Minister Shunichi Suzuki confirmed the first intervention to prop up the yen since the late 1990s in September last year, subsequent entries into the market in October were not immediately acknowledged.

That approach helped to keep market players guessing over Japan’s currency strategy, making it less clear how Tokyo might respond and potentially making it more difficult to decide on plays in the FX market.

“I can’t say with full confidence if they intervened or not. But if they have, the focus will be on how often they will step in and how much they will spend,” said Hideo Kumano, economist at Dai-Ichi Life Research Institute. “I think Kanda is trying to increase the psychological impact even with small amounts by not saying anything.”

If the latest move was a result of intervention, it may leave Japan open to criticism from its peers given that it would look like defense of a currency level, rather than an obvious sharp move. Multilateral agreements between major economies allow some leeway for intervention if movements are abrupt.