The Japanese yen rebounded as much as 2% toward 155 per dollar on Monday after sinking to as low as 160.2 earlier in the session, in what markets regarded as a possible government intervention as Japanese banks have been reportedly dumping dollars aggressively. Traders have been on alert for a potential intervention from Japanese authorities for some time now as the yen sank to 34-year lows and lost more than 10% against the dollar so far this year. Those losses came as the Bank of Japan refused to yield to market pressure last week, keeping interest rates unchanged. However, the BOJ dropped wording on buying the same amount of bonds as before, revised its inflation forecasts higher and said the economy will likely keep growing at a healthy pace. Carry trades also pressured the yen as the BOJ held rates at near-zero levels despite high borrowing costs in other major economies, prompting traders to borrow yen and invest in higher-yielding currencies.
