(Updates at 1000 EDT)
The yen dropped to its lowest level since 1990 on Wednesday 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 151.975 yen JPY=EBS , its strongest against the yen since mid-1990, and was last down 0.19% at 151.29.
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.
"They are swimming against the current here, to an extent. Intervention helps in the near term, but it's not a long term solution," said Bipan Rai, North American head of fx strategy at CIBC Capital Markets in Toronto.
The yen has slumped more than 7% this year, driven by the widening gap between U.S. and Japanese bond yields, which the Bank of Japan's small interest rate hike last week did little to change.
The U.S. Federal Reserve beginning an interest rate cutting cycle and a decline in government bond yields outside of Japan may now be key to stemming the drop in the Japanese currency.
"I suspect that intervention, or threats to conduct intervention, are really just a measure of buying time until we start to see things shift on a more sustained basis outside the country," Rai said.
KING DOLLAR 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. FEDWATCH
Guy Miller, chief market strategist at Zurich Insurance group, said that other currencies were suffering under the weight of a strong U.S. currency.
"The US economy has done much better than most had expected, particularly compared to other parts of the world," Miller said.
The dollar index =USD gained 0.11% at 104.40, and is up around 3% so far in 2024.
The market's main focus this week is on U.S. core inflation figures due on Good Friday, though already a bigger-than-expected jump in U.S. durable goods orders on Tuesday boosted the dollar somewhat, weighing further on the yen.
The euro EUR=EBS fell 0.15% to $1.0814. Sterling GBP=D3 weakened 0.07% to $1.262.
The dollar strengthened against Sweden's crown SEK=D3 after the Swedish central bank held interest rates and hinted at rate cuts in the coming months. It was last up 0.33% at 10.62 crowns.
The Swiss franc CHF=EBS fell to its lowest since early November on Wednesday at 0.9071 to the dollar. The Swiss currency is still reeling from a surprise rate cut in Switzerland last week, and is down around 7% this year.
In cryptocurrencies, bitcoin BTC= fell 1.15% to $68,987.91.
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