Japan’s yen surges against dollar on suspected intervention

SINGAPORE/LONDON Japan’s currency surged as much as 5 yen against the dollar on Monday, with traders citing heavy dollar-selling intervention by Japanese banks for the first time in 18 months after the yen hit fresh 34year lows earlier in the day.

The dramatic move begins what could be a busy week for currency traders with a Federal Reserve meeting concluding on Wednesday, ever important U.S. payrolls data on Friday, and European inflation data throughout the week beginning with German and Spain on Monday.

The dollar fell as far as 154.4 yen in several sudden moves in Asia trade and again in the European morning that took it from an intraday high of 160.245, its highest since 1990.

Japan’s top currency diplomat Masato Kanda declined to comment when asked if authorities had intervened, though traders said they had.

The dollar was at 155.55 by 0755 GMT, down 1.7%. Trading in Asia was thinner than normal due to Japan’s Golden Week holiday.

“The sudden, sharp drop in dollar-yen passes the duck test. If it looks like a duck, swims like a duck, then it probably is a duck. Looks and smells like intervention,” said Sim Moh Siong, currency strategist at Bank of Singapore.

Markets had been wary that Japanese authorities might intervene to support the yen after the currency fell more than 10% against the dollar this year.

The Commodity Futures Trading Commission’s weekly commitments of traders report showed that non-commercial traders, a category that includes speculative trades and hedge funds , had increased their yen short positions to 179,919 contracts in the week ended April 23, the largest since 2007.

The yen had moved nearly 3.5 yen between 158.445 and 154.97 on Friday as traders vented their disappointment after the Bank of Japan kept policy settings unchanged and offered few clues on reducing its Japanese government bond (JGB) purchases - a move that might have put a floor under the currency.