The yen surged briefly to the low ¥158s in European and US markets on the 2nd. Expectations for the Bank of Japan’s rate-hike pace and concerns about intervention were behind the move, while implied volatility in the currency options market also rose.
In European and US markets on the 2nd, the yen strengthened briefly to the low ¥158s. Around 5 p.m. in the Tokyo market, it stood at around ¥159.70, representing a yen gain of approximately ¥1.50.
The yen’s strength was attributed to expectations that the Bank of Japan’s rate-hike pace would accelerate, as well as persistent concerns about yen intervention by the government and the Bank of Japan, which tightened the market’s supply-demand balance.
There were also reports of expectations that the implied volatility (IV) indicator in the currency options market, which provides a view of future exchange rates, was rising.