The yen dropped to its lowest level since 1990 on Wednesday (Mar 27) before rebounding slightly after Japan’s top monetary officials met to discuss the rapidly weakening currency and suggested they were ready to intervene.

The dollar briefly rose to 151.97 yen in the Asia session, its strongest against the yen since mid-1990, but was last down 0.25 per cent at 151.19.

The Bank of Japan, the Finance Ministry and Japan’s Financial Services Agency held a meeting late in Tokyo trading hours, after which top currency diplomat Masato Kanda said he “won’t rule out any steps to respond to disorderly FX moves”.

Japanese authorities stepped in to defend the yen at 151.94 in 2022 and finance minister Shunichi Suzuki on Wednesday used the same words that preceded that intervention, warning Japan would take “decisive steps” against excessive currency moves.

The yen has slumped more than 7 per cent this year, driven by the yawning gap between US and Japanese bond yields, which the Bank of Japan’s small interest rate hike last week did little to change.

“The market is very sensitive to the 152 area,” said National Australia Bank strategist Rodrigo Catril. “If we were to break that level then recent history would suggest that intervention would be much more likely.”

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Meanwhile, the dollar is on course for solid quarterly gains after investors pared back their expectations for big interest rate cuts in the face of strong economic data and reticence from central bankers.

The dollar index was last roughly flat at 104.31, up around 3 per cent so far in 2024.

The market’s main focus this week is on US core inflation figures due on Good Friday, though already a bigger-than-expected jump in US durable goods orders on Tuesday boosted the dollar somewhat, weighing further on the yen.

Guy Miller, chief market strategist at Zurich Insurance group, said currencies were suffering under the weight of a strong US currency, including China’s yuan, which finished the domestic session at its weakest close since Nov 2023 at 7.2284.

The euro showed little reaction to Spanish inflation rising slightly less than expected in March and was flat on the day at US$1.0829. Sterling was steady at US$1.2626.

“The US economy has done much better than most had expected, particularly compared to other parts of the world,” Miller said.

“Investors who were perhaps short (betting against) the USD have probably unwound some of these positions... helping to support the dollar in recent weeks.”

The dollar strengthened slightly against Sweden’s crown after the Swedish central bank held interest rates and hinted at rate cuts in the coming months. It was last up 0.2 per cent at 10.61 kronor.

The Swiss franc fell to its lowest since early November on Wednesday at 0.9066 to the dollar, down around 0.3 per cent. The Swiss currency is still reeling from a surprise rate cut in Switzerland last week, and is down around 7 per cent this year. REUTERS