The yen swung in holiday-thinned market conditions, punching through ¥160 per dollar to touch its weakest in 34 years before erasing all its losses for the day and rebounding strongly.
The Japanese currency dropped to ¥160.245 per dollar on Monday before heading into the other direction to ¥155.01. Trade sources said Japanese banks were seen selling dollars for yen.
The moves, which took place amid thin liquidity due to a local public holiday, are a sign of nervous traders juggling the prospects of official intervention with the risks of hawkish comments by the Federal Reserve later this week.