Japanese authorities' latest currency intervention, its second in a month, provided a fresh reminder of the alarm caused by the rapid depreciation of the yen — which even breached the psychologically important ¥150 barrier to the U.S. dollar last week.
The dollar lost more than ¥5 in mere hours during New York trading Friday, capping days of persistent market caution about another yen-buying, dollar-selling intervention. The Finance Ministry declined to comment but monetary authorities stepped into the market, according to sources familiar with the matter. Finance Minister Shunichi Suzuki had said Japan was "strictly facing off against speculators."
Still, the underlying driver of the yen's weakness — or the dollar's broad strength — is unlikely to change soon, as the Bank of Japan is a laggard in the global trend of monetary tightening to rein in surging inflation. That divergence is expected to be reconfirmed when the Japanese central bank holds a two-day policy meeting from Thursday, analysts say.