TOKYO / RankWire.AI / – The U.S. dollar remained sharply lower against the Japanese yen on Tuesday after a rapid reversal in foreign exchange markets. The yen traded near 157.35 per dollar during early Asian hours. It had reached about 155.20 on Monday, its strongest level since early May. The dollar stood close to 164 yen in late July. The latest movement erased much of that advance. The yen retained most of its weekly gain despite a modest pullback.
Japan’s Ministry of Finance said Japan and the United States bought yen together on Friday, July 31. The ministry said the coordinated action addressed excessive volatility and disorderly currency movements. It did not disclose the value of the purchases. The U.S. Department of the Treasury participated in the operation. The joint intervention followed several sessions of fast and unusually large exchange-rate changes. It also marked a rare coordinated response involving both governments in the yen market.
The dollar reached about 163.65 yen on July 30 before falling quickly. The yen gained almost 4% last week, its largest weekly increase in two years. It advanced about 5% across three trading sessions. Monday’s move carried the currency to 155.20 before part of the rise faded. The exchange rate then moved back toward 157 on Tuesday. Even after that adjustment, the yen remained about 4% stronger than one week earlier.
Coordinated intervention drives rapid currency reversal
The Ministry of Finance directs Japan’s foreign exchange policy and authorizes intervention. The Bank of Japan conducts market transactions for the government. That structure placed both institutions at the center of the latest response. American monetary authorities last joined yen buying during a Group of Seven operation in 2011. The July 31 action changed prices quickly across major currency pairs. Trading remained active as the dollar moved farther from its late-July peak.
The Bank of Japan also kept its overnight policy rate near 1% on July 31. The policy board approved the decision by an 8-1 vote. One member supported an increase to 1.25%. The central bank listed recent yen weakness as an upside risk to domestic prices. It retained its 2% inflation target and broader monetary policy guidance. The decision came during the same period of heavy currency trading and sharp daily swings.
Yen preserves most gains after Monday peak
By Tuesday, the dollar had recovered from Monday’s low but remained well below its late-July high. The broader dollar index traded near a two-month low. The euro stood close to $1.1511, while sterling changed hands around $1.3427. Japan’s Nikkei 225 share index slipped about 0.3% during Asian trading. Market activity remained focused on the dollar-yen exchange rate. The pair stayed near 157 after several sessions of unusually wide price movements.
The stronger yen reduced the local-currency cost of dollar-priced imports compared with late-July levels. Japan relies heavily on imported energy, food ingredients and industrial raw materials. The earlier yen decline had raised costs for many goods purchased in dollars. Tuesday’s exchange rate still placed the dollar near 157 yen after a volatile trading period. The yen remained well above the area near 164 per dollar reached in July. Coordinated intervention defined the latest shift in the market.