Yen rises sharply against Singdollar amid speculation of more intervention

TOKYO – The yen rallied sharply on Aug 3 amid speculation that the authorities might have intervened to prop up the currency again after coordinated action between the United States and Japan last week.

The Japanese currency swung from a small decline to gain as much as 1.4 per cent versus the US dollar during morning trading. It then pared a large chunk of the move and has remained range-bound, raising the prospect that jittery traders or algorithms may also have been the cause. The yen was up 0.5 per cent at 156.71 per US dollar as at 4.10pm Singapore time.

“The price action alone looks like intervention,” said Gareth Berry, a strategist at Macquarie Group in Singapore. “The Ministry of Finance has a limited window of opportunity to do some damage on the USD/JPY chart, and crack some support levels.”

The yen also rose as much as 1 per cent against the Singapore dollar in early trading on Aug 3. It was up 0.4 per cent at 122.24 per Singdollar at 4.10pm Singapore time. At this level, the yen has risen more than 3 per cent against the Singdollar since the intervention on July 30.

Under the International Monetary Fund’s framework, a currency may be classified as free-floating if official intervention is limited to no more than three episodes over a six-month period, with each episode lasting no more than three business days. By that standard, Japan could intervene again on Aug 3, following its market operations on July 30 and 31.

Japan and the US Treasury Department are now working together to a degree unseen in decades to shore up the currency, raising the stakes for anyone betting against it. Treasury Secretary Scott Bessent said the US would not hesitate to step into the market again. President Donald Trump added his stamp of approval to the recent action, describing the intervention as “a signal of friendship.” 

Japan’s Finance Ministry earlier on Aug 3 confirmed the joint intervention and said it will not hesitate to take further action. Central bank data indicated that day that Japan may have spent as much as US$36.58 billion (S$46.9 billion) to buy yen in the latest action aimed at strengthening the local currency.

While many in the market still question the capacity of the authorities to change the long-term trajectory of the yen in the US$9.5 trillion-per-day currency market, there is no doubt over their power in short bursts.

In just two days at the end of last week, they reversed over two months of losses in the yen, using a combination of direct purchases in the market, calls by officials to banks that deal in the currency and jawboning from Bessent and Japanese Finance Minister Satsuki Katayama.

“It seems likely that the authorities would intervene further in coming days if the yen begins to unwind the recent move, as was the case in May of this year,” Goldman Sachs strategists said in a note. “We continue to think intervention is an effective tool for the authorities to buy some time before fundamental factors turn more positive.”

The joint intervention is the first since 2011’s coordinated action to weaken the yen after the devastating earthquake in eastern Japan.

The currency has been under pressure from rising oil prices, Japan’s persistent budget deficits and a yawning interest-rate gap with the US and other major economies. The depreciation has sounded alarm bells in Tokyo, with rising import costs squeezing businesses and consumers. A failure to arrest the drop would have impact that goes far wider than Japan, as turmoil in the nation’s financial markets tends to spill out globally. 

“The significance of recent developments may not be the intervention itself, but the message it sends: Markets are increasingly coming to believe that excessive yen weakness is no longer viewed as solely Japan’s problem,” said Masayuki Nakajima, senior currency strategist at Mizuho Bank in London.

“It appears increasingly likely that concerns in Washington over the risks posed by a sharp depreciation of the yen and rising volatility in the JGB (Japanese government bond) market, particularly the potential spillover effects on the US Treasury market, are part of the backdrop to these developments.”

Volatility in Japanese government bonds jolted Treasuries and drew the ire of Bessent earlier in 2026. Meanwhile, the more the yen’s depreciation gives Japan an advantage in trade with the US, the more it is likely to irk Trump.

Asked on Air Force One what it is that the US is getting out of helping Japan, Trump said “financial benefit”. “It’s also good for the world economy,” he added. 

Rebecca Patterson, a JPMorgan and Bridgewater Associates veteran who is now a senior fellow at the Council on Foreign Relations, said Japan is already selling Treasuries to help fund its intervention.

“The prospect of a larger, more lasting allocation shift could pose a larger threat to Treasury yields,” she noted. “It’s in Bessent’s interest to convince Japan not to take that step.”

Bessent’s commitment to shoring up the yen was clearly shown when Reuters published a photograph of a notepad in front of him at a Cabinet meeting in Camp David on July 31. Under a “To Do” title, it was written: “Buy Japanese Yen (JPY) $5-10 bil”. He had earlier said in a Fox Business interview on July 30 that the yen was “very undervalued” and “excess volatility” was not healthy. 

“Given joint action with the US is still ongoing, USD/JPY could decline below 155 if stop losses are triggered,” said OCBC strategist Moh Siong Sim. “But the success of intervention in reversing the JPY weakness depends on whether intervention is complemented by or is a substitute for a more hawkish BOJ (Bank of Japan) stance.” BLOOMBERG, REUTERS