Asian Shares Rise as Tech Stocks Gain, Investors Monitor Yen for Intervention

Asian shares rose on Wednesday, boosted by gains in technology stocks, as investors closely monitored the Japanese yen for potential intervention by authorities. The yen fell to its weakest level against the dollar since 1990, reaching as high as 155.17 yen, before falling back in choppy trading.

The decline in the yen has revived anticipation of currency intervention, with Japanese Finance Minister Shunichi Suzuki and other policymakers stating they are watching currency moves closely and will respond as needed. Bank of Japan Governor Kazuo Ueda also said the central bank may raise interest rates again if the yen's declines significantly push up inflation, highlighting the dilemma the weak currency has become for policymakers.

The Bank of Japan is set to conclude its latest policy meeting on Friday. Intense speculation of intervention from Japanese authorities to shore up the yen had hampered the dollar's ascent towards the psychologically key 155 yen level, seen by some market participants as a line in the sand that would prompt Tokyo to take action.

The broader market saw the dollar on the front foot, recouping some of its losses after a slight tumble earlier in the week. The euro and sterling edged slightly away from recent highs, while the Australian dollar was buoyed by receding bets of rate cuts from the Reserve Bank of Australia this year.

Why this matters: The sharp decline in the Japanese yen and potential for intervention by authorities has significant implications for global currency markets and international trade. The Bank of Japan's monetary policy decision on Friday will be closely watched for any action to address yen weakness and its impact on the Japanese economy.

Japan's ruling party is not yet in active discussion on what yen levels would be deemed worth intervening in the market, though the currency's slide towards 160 to the dollar could prompt policymakers to act. Markets are focusing on whether BOJ Governor Ueda will offer a more hawkish tone on prospects of a near-term interest rate hike and whether the central bank will leave unchanged its guidance on government bond purchases.

Key Takeaways

• Asian shares rose, boosted by gains in tech stocks.
• Japanese yen fell to weakest level against dollar since 1990.
• Japan may intervene to shore up yen, as BOJ meets on Friday.
• Dollar recouped losses, while Aussie dollar rose on rate cut bets.
• Yen's slide to 160 per dollar could prompt Japan to intervene.