The Bank of Japan sold yen today for the second day in a row to try and prevent an export-led recovery from being derailed by a surge in the Japanese currency.
The dollar swiftly rose almost one full yen to around 124.80 yen after the Bank of Japan came into the market on behalf of the Ministry of Finance (MOF).
Not content with a single sally into the market, the authorities kept dealers on their guard by repeatedly intervening, officials said.
They declined to say which currency they bought in exchange for yen but yesterday the central bank bought dollars for the first time since September 28th after the yen climbed briefly to 123.50 to the dollar, its highest level in five months.
The yen has been strong in recent days because of growing evidence that Japan has pulled out of its third recession in a decade. Economists expect growth in the first quarter could have reached an annualised rate of more than eight per cent, handily outpacing the United States.
Trade figures released earlier in the day showed that the recovery is being powered by exports.
Japan shipped five per cent more goods in April than a year earlier in volume terms, and the value of the exports rose 1.6 per cent, the first increase in 13 months.
Those gains could be threatened if the yen were to rise too far too fast because Japanese exports could be priced out of the United States and other key markets by South Korea and other Asian competitors.