Yen slips following suspected intervention; Dollar maintains steady course

Yen-Dollar exchange rate: The Yen experienced a slight decline against the Dollar on Thursday, reversing its direction after a sudden surge late on Wednesday, which traders and analysts swiftly attributed to intervention by Japanese authorities.

As of 1055 GMT, the Yen was 0.4 per cent lower at 155.18 per Dollar, retracing approximately half of its late Wednesday surge from around 157.55 to exactly 153 over a span of about 30 minutes.

The sharp movement occurred during a quiet period in the markets after Wall Street's closure and hours after the conclusion of the US Federal Reserve's policy meeting.

The Dollar had already been facing pressure as Fed Chair Jerome Powell confirmed the central bank's easing bias, although he reiterated that interest rate cuts might not occur soon due to persistent inflation.

"This signals to markets that they are willing to act at any time, day or night," commented Jane Foley, head of forex strategy at Rabobank. "It shows authorities are very aware of the conditions, as when they moved, the Dollar was already on the backfoot because Powell was not as hawkish as he could have been."

Masato Kanda, Japan's vice finance minister for international affairs, who oversees currency policy at the MOF, declined to comment on whether Japan intervened in the market.

Despite potential intervention, the Dollar remains up over 10 per cent against the Yen this year, as traders adjust their expectations regarding the timing of the first Fed rate cut. The Bank of Japan has also indicated a cautious approach to further policy tightening after its first rate hike in March since 2007.

The Dollar index, which measures the currency against major peers, remained little changed at 105.72 on Thursday. Meanwhile, the Euro and Sterling experienced minor fluctuations, with the Euro down 0.1 per cent at $1.0705 and Sterling slipping 0.1 per cent to $1.2513.

The Federal Reserve's decision to hold rates steady on Wednesday was met with relief in financial markets, with Powell stressing a prolonged period before policymakers would be comfortable with inflation nearing their 2 per cent target. This sentiment contrasts with expectations of further rate hikes.

In other currency news, hotter-than-forecast Swiss inflation in April drove the Swiss franc higher against both the Euro and Dollar. Despite this, expectations for a cut from the Swiss National Bank in June remain, particularly if the European Central Bank also cuts rates next month.

(With Reuters inputs.)