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Yen Recovers From a 34-Year Low, as Markets Soar

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The yen has bounced dramatically, surging just after reaching a new 34-year low against the dollar.
On Monday, the yen fell to 160.17 per dollar in tumultuous early trade, with liquidity limited due to Japan’s holiday.

It later rebounded to 155.05. The Japanese stock market was closed on Monday for a national holiday. However, several analysts felt that Japan intervened to strengthen the yen.

“I have no comment at this time,” Masato Kanda, Japan’s vice minister of finance for foreign relations, told reporters at the ministry after the yen unexpectedly rose.

Meanwhile, the currency rallied as another higher-than-expected US inflation report dashed prospects for Federal Reserve interest rate cuts this year.

The yen has been under renewed pressure after the Bank of Japan declined to tighten monetary policy further at its meeting last week.

Officials have often stated that they are prepared to intervene if the currency rate fluctuates dramatically, citing speculators as a major concern.

However, analysts questioned whether an intervention would have much of an influence.

“Expectations of intervention having a sustained impact may disappoint given that macroeconomic fundamentals do not support a sudden shift to a hawkish monetary stance,” said Tapas Strickland of National Australia Bank.

Lombard Odier’s Homin Lee added: “Pressures will stay on the dollar until we see more negative GDP and inflation statistics in the US and a more hawkish tilt at the BoJ.

Following a Wall Street surge, equity markets rose as solid earnings countered a higher reading on the personal consumption expenditures (PCE) price index.

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