The U.S. dollar experienced a sharp decline against the Japanese yen late Wednesday afternoon, pulling back from its 34-year peak following speculation about intervention from Japanese authorities. This move comes as the yen had depreciated by 11% since the beginning of the year.

The currency pair, dollar/yen, was trading at 153.30, showing a significant drop of 2.85%. This level is notably lower than Monday's low of 154.40, which itself was a reaction to the pair retreating from a high of 160.245.

Market participants pointed to actions by Japanese authorities buying yen as a catalyst for the currency's rebound on Monday. However, when questioned about potential intervention, Japan's top currency diplomat, Masato Kanda, refused to confirm if authorities had stepped in. Kanda described the recent movements in the currency market as "speculative, rapid and abnormal," emphasizing that such dynamics could not be ignored.

At this stage, Kanda's comments have left the market with unanswered questions about Japan's currency strategy and whether the government will continue to take steps to shore up the yen. The recent volatility highlights the challenges faced by Japanese policymakers as they balance domestic economic concerns with the impacts of global currency fluctuations. The situation remains fluid, and investors around the world are closely monitoring Japan's actions for any signs of further intervention or policy shifts that could influence the currency markets.

Reuters Article