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The yen jumps 3% then falls again, amid speculation of Japanese intervention

The yen soared on Wednesday shortly before 9:00 p.

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The yen jumps 3% then falls again, amid speculation of Japanese intervention

The yen soared on Wednesday shortly before 9:00 p.m. GMT, briefly gaining more than 3% against the dollar before falling again, leading to further speculation about possible intervention by Japanese authorities to support their currency. This brutal movement, which brought the Japanese currency up to 153.04 yen per dollar, occurred a few minutes before 9:00 p.m. GMT, the time at which the closing prices of the day are set. Around 00:30 GMT on Thursday, however, the Japanese currency had already fallen to 155.88 yen per dollar.

The yen had already experienced a similar rebound on Monday, which was seen as the result of an initiative by Japan to stop the slide of its currency. Weakened by a very accommodating monetary policy of the Bank of Japan (BoJ), the archipelago's currency fell on Monday to 160.17 yen per dollar, its lowest level in 34 years, before recovering.

“Many conclude that this is an intervention” by the Japanese authorities to defend their currency, Marc Chandler of Bannockburn Global Forex reacted on Wednesday after the collapse of the yen. “And she seems more aggressive than Monday.” The Japanese authorities do not traditionally communicate during an intervention, and only provide information several days or even weeks later. They had acted in 2022, successfully, once in September and twice in October, putting more than 60 billion dollars on the table to strengthen their currency.

In addition to direct intervention in the foreign exchange market, a country can raise its rates to make them more attractive to foreign investors, which helps to stimulate its currency. In the case of economies poor in natural resources and raw materials, which is the case of Japan, central bankers may be encouraged to act to prevent currency depreciation from causing import prices to soar and boosting inflation. . But during his press conference on Friday, BoJ Governor Kazuo Ueda said that the effect of the current weakness of the yen on inflation was "not significant" for the moment, thus ruling out , in fact, an increase in the key rate to revive the currency of the archipelago.

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