TOKYO- The yen slid against the dollar on Thursday, reversing direction after a sudden surge overnight that traders and analysts were quick to attribute to intervention by Japanese authorities.
The yen was 0.80 percent lower at 155.73 per dollar, retracing about half of its late Wednesday surge from around 157.55 to exactly 153 over a period of about 30 minutes.
The sharp overnight move came in a quiet period for markets after Wall Street had closed, and hours after the US Federal Reserve had wrapped up its policy meeting.
The dollar was already on the back foot as Fed Chair Jerome Powell confirmed the central bank’s easing bias, even as he reiterated that sticky inflation meant interest rate cuts may be a while in coming.
“It caught markets off guard because, obviously, it happened in the US session and seemed to be timed with the FOMC to take advantage of a weaker dollar,” said Kyle Rodda, senior financial market analyst at Capital.com in Melbourne.
“The ‘sneak attack’ element really is the MOF looking to punish speculators and send a warning about shorting the yen,’ he said, referring to the Japanese Ministry of Finance (MOF).
Japan’s vice finance minister for international affairs, Masato Kanda, who oversees currency policy at the MOF, told Reuters he had no comment on whether Japan had intervened in the market.
The dollar remains up more than 10 percent against the yen this year, as traders push back expectations on the timing of a first Fed rate cut, while the Bank of Japan has signaled it will go slow with further policy tightening after raising rates for the first time since 2007 in March.
The gap between long-term government bond yields in the two countries is 376 basis points. That helped lift the dollar to a 34-year peak of 160.245 yen on Monday and also spurred a sharp reversal, which official data suggested was because of Japanese intervention totaling about $35 billion.
