Finance
Yen sees two sudden spikes as rate check speculation swirls
Published by Global Banking & Finance Review®
Posted on January 23, 2026
3 min readLast updated: January 23, 2026
Global Banking & Finance Review®
Company
Published by Global Banking & Finance Review®
Posted on January 23, 2026
3 min readLast updated: January 23, 2026
The U.S. dollar faces its worst weekly decline in a year amid geopolitical tensions, while the yen struggles ahead of the Bank of Japan's policy decision.
By Hannah Lang
NEW YORK, Jan 23 (Reuters) - The yen was volatile on Friday, with two sudden spikes raising market speculation that authorities had conducted a rate check, often a precursor to intervention.
The yen <JPY=> was last stronger on the day at 156.495 per dollar, after touching 156.19.
Traders are alert to the prospect of intervention from Tokyo to stem the Japanese currency's slide after the yen had weakened to as soft as 159.2 per dollar, close to 18-month lows, during a press conference by Bank of Japan Governor Kazuo Ueda after the BOJ held rates steady.
"Given the lack of news, the only thing I can really see is just this underlying bearish sentiment [and] fear of intervention, said Marc Chandler, chief market strategist at Bannockburn Capital Markets.
Shortly after Ueda's press conference, the yen suddenly strengthened to 157.3 per dollar, though the loose market consensus was that authorities had not intervened directly but had run rate checks with banks.
A rate check - asking what price it would get if it were to intervene - is something Japanese authorities can use to signal their readiness to enter the market.
"It's late in the week ... and nobody's got a firm grasp on what's going on. I think that's what's making it a little bit more anxious of a move," said Erik Bregar, director of FX & precious metals risk management at Silver Gold Bull.
The yen has been under relentless pressure since Sanae Takaichi took over as Japan's prime minister in October, dropping more than 4% on fiscal concerns and hovering near levels that have spurred verbal warnings and intervention fears.
A bond market rout this week underscored investor nerves about Japan's fiscal position as Takaichi called a snap election for February and promised tax cuts, sending Japanese government bond yields to record highs. They have recovered somewhat since then but investors remain skittish.
DOLLAR SELLING MOMENTUM
Elsewhere, the dollar was set for its steepest weekly decline since June as geopolitical tensions unsettled investors.
U.S. President Donald Trump on Wednesday said he had secured U.S. access to Greenland in a deal with NATO, which came as he backed off tariff threats against Europe and ruled out taking the autonomous territory of Denmark by force.
The dollar has borne the brunt of investor angst in the currency markets as U.S. assets were pummelled at the start of the week amid the intensifying geopolitical tensions, which revived talk of the 'Sell America' trade that emerged in the aftermath of Trump's sweeping Liberation Day levies last April.
The dollar index, which measures the U.S. currency against six units, was last weaker at 97.876. It was headed for a more than 1% weekly decline, its steepest since June.
The euro was last 0.2% higher at $1.1779, and set for a more than 1% weekly gain. The French government on Friday survived two no-confidence votes, with more expected after Prime Minister Sebastien Lecornu said he was invoking the constitution to force the expenditure part of the 2026 budget bill through parliament.
Meanwhile, sterling was last at $1.35921. Data released on Friday showed that UK retail sales rose unexpectedly in December but it had little effect on the pound.
(Reporting by Hannah Lang in New York and Sophie Kiderlin in London; additional reporting by Ankur Banerjee in Singapore; Editing by Toby Chopra, Susan Fenton and Nick Zieminski)
The U.S. dollar is the official currency of the United States and is widely used as a global reserve currency.
Monetary policy refers to the actions taken by a country's central bank to control money supply and interest rates to achieve economic goals.
Currency markets, also known as foreign exchange markets, are platforms where currencies are traded against one another.
The Bank of Japan is the central bank of Japan, responsible for implementing monetary policy and maintaining financial stability.
Currency exchange is the process of converting one currency into another, typically for trade, travel, or investment purposes.
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