The yen is nearing a key psychological level of 150 against the dollar after the yield gap with the US widened on hotter-than-expected inflation data.
The currency traded just below that rate versus the greenback on Friday morning in Asia amid speculation Japanese authorities will step in to support it should the yen suddenly weaken. A senior finance ministry official said that the Group of Seven reaffirmed its stance that excessive moves are problematic, during a meeting Thursday in Morocco.
“Close attention is being paid to the 150 level,” said Yuta Suzuki, vice president at MUFG Bank Ltd. in New York. “Investors probably don’t want to buy dollar-yen above 150 primarily because of concerns about intervention.”
The yen hovered at 149.74 per dollar as of 10:02 a.m. in Tokyo after losing 0.9% over the past three days.
A spike in Treasury yields across the curve after US consumer prices came in higher than forecasts further increased the gap between US and Japanese yields, putting pressure on the yen. The yen is one of the world’s worst-performing major currencies this year as higher yields elsewhere have drawn money into overseas markets.
After depreciating past 150 for the first time in almost a year on Oct. 3, the currency suddenly spiked to 147.43, sparking speculation of an intervention. Japanese officials so far have not confirmed whether or not they came into the currency market, although early estimates suggested it was not their action.
For Japanese authorities, what seems to matter is sharp fluctuations in the yen. Finance Minister Shunichi Suzuki said on Oct. 3 that he won’t judge the possibility of intervention by currency levels, but through volatility. He then said on Oct. 6 that gradual, one-directional moves could be considered excessive.
Though the dollar-yen rate is nearing an important level, the pair’s two-week implied volatility - a measure of expected swings - stayed near its lowest level since March 2022.
