The yen jumped against the dollar on Monday after weakening sharply at the start of the session. Some operators are talking about possible intervention to support the currency by the Japanese authorities.
The dollar fell to 156.27 yen around 5:38 GMT, after hitting a high of 160.245 earlier in the day. Market sources said Japanese banks were selling dollars for yen.
This alleged intervention caused a rebound in the yen, but analysts remain cautious about its long-term prospects. The Japanese currency has lost 11% against the dollar in 2024 and recently reached 34-year lows.
The interest rate gap between the United States and Japan remains the main factor influencing the yen. As U.S. interest rates rose faster than those in Japan, the dollar became more attractive to investors, weighing on the yen.
Even if intervention may have temporarily supported the yen, it is likely that it will continue to fall as long as the interest rate gap remains wide. Analysts say the Bank of Japan may have to intervene again if the yen moves closer to 160 yen to the dollar.
