The government and the Bank of Japan conducted a rate check in preparation for yen-buying intervention. As the yen strengthened in overnight and early-morning trading, they sought to curb expectations of additional rate hikes.
In the foreign exchange market from late on the 18th into the early hours of the 19th, the yen surged by about ¥1 against the dollar, briefly reaching the upper ¥156 range per dollar. The government and the Bank of Japan conducted a rate check in preparation for yen-buying intervention, government officials said, apparently aiming to discourage a renewed acceleration in yen depreciation and dollar appreciation.
The yen had weakened after the Bank of Japan decided on the 18th to raise its policy rate from around 1.0% to around 1.25%, falling to its weakest level against the dollar in about two weeks. Market participants were quoted as saying that the fact that 2 of the policy board members opposed the rate hike fueled dollar buying and yen selling.
In the foreign exchange market, the yen weakened to nearly ¥164 per dollar in late July, approaching a level not seen in about 39 years and 8 months. The government and the Bank of Japan subsequently carried out yen-buying intervention totaling ¥6 trillion–¥7 trillion on 30 July to curb the yen's decline. The Japanese and US governments were reported to have launched coordinated intervention during US trading hours on the 31st.
The latest developments have been reported in the context of monitoring the yen's depreciation to prevent it from advancing excessively. Market participants are watching the market's direction and the Bank of Japan's future monetary easing and tightening developments.