In the Tokyo foreign-exchange market on Monday, the yen weakened, with the dollar trading in the upper ¥157 range. It briefly fell into the ¥158 range in the afternoon before the yen was bought back and settled in the upper ¥157 range against the dollar.
In the Tokyo market at the start of the week, the dollar traded in the upper ¥157 range. In afternoon trading, the dollar was quoted at ¥157.65–67 and the euro at ¥176.57–61. Against the backdrop of higher US long-term interest rates at the end of the previous week, expectations of a widening US-Japan interest-rate differential came into focus, and yen selling prevailed.
The yen briefly fell into the ¥158 range, but buying of the yen emerged after Prime Minister Takaichi Sanae (高市 早苗) said in her policy speech that she would achieve fiscal sustainability. Some market participants also expressed concern about possible foreign-exchange intervention by the government and the Bank of Japan.
The move reflected a combination of expectations for a widening US-Japan interest-rate differential and concern about intervention on the Japanese side. Depending on developments, volatility in the foreign-exchange market could widen again.