Japanese yen weakened slightly but retained most of its gains after Japan and the United States carried out a rare coordinated intervention in the foreign exchange market last week to support the Japanese currency.
Yen gained around 5% over the past three trading sessions after the Japanese government confirmed that it had conducted a coordinated yen buying operation with the United States.
Japanese currency declined by 0.25% to 157.56 yen per dollar, giving up part of its gains after touching a three month high of 155.20 yen per dollar in the previous session. Despite this decline, the yen remains well above its 40 year low of 163.99 per dollar recorded in July.
Axel Merk, Chief Investment Officer at Merk Investments, said the joint action by Japan and the United States sends a clear message to markets not to bet on further weakness in the yen.
He added that most market participants agree that foreign exchange interventions have a limited impact over the medium term, explaining that the main objective of the move is to signal to traders that they should not build excessively large short positions against the yen.
Against the euro, the yen declined by 0.33% to 181.36 yen, after reaching its strongest level in nearly nine months at 179.435 yen in the previous session.
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