Yen jumps as Japan takes on speculators

SINGAPORE - A brief jolt higher in the yen on May 4 sparked speculation that Japan had again sought to defend its sinking currency, though analysts say pressure is likely to persist even as the risk of further official intervention hangs over the market.

The yen has languished for weeks near record lows in real terms, with policymakers cautioning that its weakness is stoking inflation and squeezing living costs.

Those warnings appeared to turn into action last week, when sources told Reuters that the authorities had bought yen; money market data pointed to roughly US$35 billion (S$44.6 billion) in spending behind a sudden 3 per cent rally in the currency on April 30.

The move on May 4 was more modest, briefly pushing the yen from around 157.2 per US dollar to just below 156 before quickly unwinding, leaving it near 157.

Markets viewed the jump as a warning shot to speculators betting against the currency, though its swift reversal underlined how difficult it will be for the authorities to counter years of decline through intervention alone.

The yen also rose against the Singapore currency, climbing 0.2 per cent to 123.16 per Singapore dollar as at 4.25pm. The yen has gained 0.8 per cent against the Singdollar in the past month, though it is still down 1.1 per cent to date in 2026.

Japan’s Ministry of Finance was not immediately available for comment on the market moves when contacted by Reuters on a public holiday in Japan.

Finance Minister Satsuki Katayama, speaking to reporters in Uzbekistan, said she had no comment when asked whether the authorities had intervened, reported Bloomberg.

“The late move in dollar/yen could reflect either a small, calibrated operation by the authorities or simply market moves amplified by Golden Week’s thin liquidity,” said State Street Investment Management senior fixed income strategist Masahiko Loo.

“Either way, the intent appears to be about keeping markets alert rather than deploying maximum firepower,” he said. “Ultimately, however, intervention only buys time”, with interest rate moves necessary to really lift it.

The yen has been under pressure for years, first from Japan’s ultra-low interest rates, then on fears Prime Minister Sanae Takaichi plans to borrow and spend to ramp up growth, and now by its exposure to the global oil shock.

Many analysts point to the global backdrop and see little in the recent moves by Tokyo to alter the broader outlook for the yen: Japan’s interest rates remain below inflation, and markets no longer expect US rate cuts in 2026.

“The intervention does not affect our medium-term yen-bearish view,” said analysts at JPMorgan in a client note, who see the US dollar/yen rate at 164 in end-2026.

Bank of America currency strategist Oliver Levingston forecasts US dollar/yen more or less steady at 157 at the end of 2026. REUTERS