The yen hit a 10-day low against the dollar on Monday after Japan’s finance minister said Tokyo was ready to intervene in the currency market if needed, and as stronger risk appetite sapped demand for traditional safe havens.
The yen had reached an 18-month high against the dollar last week JPY=, having gained around 15 percent in the past six months in part because of waning investor expectations for a steady increase in U.S. interest rates.
That has prompted a ramping-up of intervention talk from Japan, with Finance Minister Taro Aso’s comments on Monday following remarks last week from Prime Minister Shinzo Abe, who said it was watching the yen’s movements and would act if necessary.
Many investors believe the bar for intervention is still high and that the comments amount to no more than verbal intervention.
“It’s like the ECB (European Central Bank). They say they’re ready to take action if needed but we’ve come from 123, 124 (yen per dollar) and we went to 105, and they haven’t done anything,” said UBS’s head of currency strategy, Constantin Bolz, referring to the last six months.