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The yen surged about 1.8% in the span of a half hour during the afternoon of the Asia session and topped 155.04 per dollar. The currency later pared some of the advance, trading around 156 as of 9:34 a.m. in London.

Japan’s markets were shut for a holiday on Wednesday, but analysts said the currency’s jump wasn’t due to thin liquidity. The Finance Ministry did not immediately respond to a request for comment outside regular working hours.

The move “has all the marks of intervention,” said Rodrigo Catril, a strategist at National Australia Bank. “Price action in recent days reinforces the view that the MOF in Japan is keen to prevent a move toward 160 in yen, while also seeking to disincentivize speculators to take on the yen.”

Talk about Japan’s market action has dominated trader discussions in recent days, with many seeing the 160 level as a trigger point for currency officials. In late April, the government intervened for the first time since 2024, causing the yen to surge as much as 3% in intraday trading.

While Japanese officials have declined to comment directly on whether authorities stepped in, people familiar with the matter have said it took place on April 30 and analysis of Bank of Japan accounts indicates that it likely spent around $34.5 billion.

Goldman Sachs Group Inc. analysts said Japan has the firepower to intervene 30 times in currency markets at last week’s scale, though officials are expected to conserve their reserves and step in at more effective moments.

Japanese authorities spent a total of around $100 billion in buying the yen several times in 2024 after the currency tumbled to around 160.17. Additional steps were taken on days when the yen reached 157.99, 161.76 and 159.45.

Options pricing suggests traders expect further bouts of action. One-week risk reversals, which depict the difference in demand between bullish and bearish bets, show yen sentiment is the most bullish since February, hovering near levels that have previously been associated with currency intervention risk since 2022.

What Bloomberg Strategists Say...

“Dollar-yen is suddenly lower on Wednesday for no apparent reason which will have traders pointing fingers in the direction of potential dollar selling by Japanese authorities”

Mark Cranfield, Markets Live strategist

There has been speculative trading in currency markets for a while, Japanese Finance Minister Satsuki Katayama said on Monday. Last week, the nation’s top currency official, Atsushi Mimura, told speculators he was delivering a “final advisory if you want to escape” and echoed comments from Katayama that “the timing for taking bold steps is nearing.”

“The language used by the MOF last week in warning speculators about intervention risks was hard-hitting,” said Jane Foley, a strategist at Rabobank. “The fact that the dollar was on the back foot due to hopes regarding the Iran war may have provided the incentive for the MOF to step in again.”

A Finance Ministry official had said that based on International Monetary Fund guidelines, Japan can conduct only two more sessions of three-day interventions by November if it wants to maintain its status of having a freely floating exchange rate.

Reports of the IMF guideline “emboldened investors to push USD/JPY back higher,” said David Forrester, a senior strategist at Credit Agricole CIB in Singapore. “This has given the MOF and the BOJ another opportunity to intervene to defend around 157 in USD/JPY, which continues to look like the new line in the sand.”

--With assistance from Vassilis Karamanis.

(Updates with pricing and options metrics.)