The dollar fell sharply against the Japanese yen, which surged to a more than two-month high, as traders braced for possible action from Tokyo to curb excessive currency volatility.
The move came alongside broader dollar softness after signals from Washington suggested progress toward a diplomatic breakthrough with Iran.
The yen climbed as much as 1.8% during intraday trading, briefly pushing the dollar down to around 155 yen its weakest level since late February. The sudden shift sparked market speculation that Japanese authorities could again step in to stabilise the currency following repeated warnings against speculative trading.
Japanese Finance Minister Satsuki Katayama reiterated earlier in the week that authorities were prepared to take “decisive measures” against disorderly moves in the foreign exchange market, underscoring Tokyo’s growing concern over yen weakness.But the Ministry of Finance did not immediately comment on Wednesday’s sharp currency movement, with markets noting the lack of official confirmation due to a local holiday.
Analysts say Japan’s efforts to support the yen are being complicated by external pressures, including elevated US Treasury yields and persistent strength in oil prices, both of which tend to reinforce demand for the dollar. One strategist noted that while intervention can create short-term relief, broader macroeconomic conditions continue to limit sustained yen recovery.
Elsewhere in currency markets, most major peers gained against the dollar as geopolitical developments added to the shift in sentiment. US officials signalled a temporary pause in certain maritime security operations linked to tensions in the Strait of Hormuz, citing progress toward a broader agreement with Iran.
The announcement followed remarks from the US Secretary of State indicating that Washington had achieved key objectives in recent military actions.
Oil prices responded by easing, with Brent crude dropping more than 2.5% to about $106 a barrel, easing some inflationary pressure concerns but remaining elevated by historical standards.
The euro rose 0.4% to $1.1735, while the British pound also gained 0.4% to $1.3598. The Australian dollar outperformed, touching its highest level in four years after the Reserve Bank of Australia delivered its third rate hike of the year, lifting it to around $0.724.
Attention now turns to upcoming US non farm payrolls data, which traders will scrutinise for signs of labour market resilience. A strong reading could reinforce expectations that the Federal Reserve will keep interest rates steady, while weaker data may revive speculation about potential rate cuts later in the year.
Goodness Anunobi
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