The dollar-yen rate broke below the key ¥155 level and briefly plunged to the ¥152 range. The market believes the move was driven by autonomous market forces rather than government intervention, with developments in the New York market likely to determine what happens next.
In Tokyo foreign-exchange trading on the 8th, the yen at one point strengthened into the ¥153 range per dollar, before briefly entering the ¥152 range in the afternoon, its strongest level in roughly six months, since February. The previous day, it broke below ¥155 and plunged as stop-loss orders were triggered.
Experts say expectations of coordinated Japan-U.S. action to correct the yen's weakness ran ahead of events, but caution that the latest appreciation does not provide conclusive evidence that the Bank of Japan will raise interest rates. Some warn that, given how long ¥155 has served as support, a break below that level could accelerate the yen's appreciation.
The market broadly shares the view that the move was not caused by government intervention, and the view is spreading that the yen's appreciation reflects natural market forces, including real-money demand and position unwinding. The backdrop is thought to include capital flows by institutional investors, including repatriation, and the unwinding of carry trades.
The market has not yet reached a conclusion. With activity in the U.S. market light on the 8th and 9th, the point at which New York market participants return is seen as key to making a firm assessment.