Japan’s currency fell to 160.17 to the dollar, before rising to 155.01 on speculation of intervention by authorities.
The Japanese yen fluctuated wildly in trading after sinking to a 34-year low against the US dollar.
The yen on Monday fell to 160.17 yen to the dollar, its lowest since April 1990, prompting whispers that Japanese authorities may intervene to support the yen for the first time since late 2022.
Japan’s currency soared to 155.01 late in the day, prompting speculation among traders that authorities had bought up the currency to halt the decline.
Officials in Japan, which is marking a public holiday, have denied any intervention by authorities.
The yen has been in near-continuous decline since the beginning of 2021 as the Bank of Japan (BOJ) maintained ultra-low interest rates while the US Federal Reserve and other central banks raised borrowing costs.
The downward spiral has continued in recent weeks, despite the Bank of Japan raising interest rates for the first time in 17 years last month as expectations for interest rate cuts fade as U.S. inflation exceeds target.
The weaker yen has helped boost profits for Japan’s exporters and put more cash in the pockets of tourists visiting Japan, but rising prices for imported goods are straining household budgets.
Japanese officials have repeatedly said that while authorities have refrained from intervening during the year-long exchange rate decline, they are prepared to intervene to prevent sharp fluctuations in the exchange rate.
Japan’s central bank on Friday kept its policy interest rate unchanged at 0-0.1%.
Bank of Japan Governor Kazuo Ueda said at a press conference that exchange rate fluctuations affect monetary policy only when they have a significant impact on the economy.
“If the movement of the yen has an impact on the economy and prices, it cannot be ignored. It may be a reason for policy adjustment,” Ueda said.