The yen rallied sharply after dropping to a new 34-year low in the 160 level against the U.S. dollar in Asian trading on Monday amid speculation of intervention by Japan, although its top currency diplomat would not confirm whether the government had stepped in.

The dollar topped the 160 yen line for the first time since April 1990, rising from the 158 yen level in thin trading with financial markets in Tokyo closed for a national holiday.

A financial screen in Tokyo on April 29, 2024, shows the yen rebounding to the 155 range against the U.S. dollar, having briefly fallen to the 160 range, a fresh 34-year low, earlier in the day. (Kyodo)

But the U.S. currency quickly fell back, dropping to as low as the 154 yen level as some dealers suspected Japanese authorities may have stepped into the currency market to stem the yen's slide.

In New York on Monday, the yen hovered between 155 and 157 per dollar, and was quoted at 156.30-40 at 5 p.m., compared with 158.32-42 late Friday in New York.

The yen also fell to around 171 against the euro at one stage, its lowest level since the single currency was introduced in 1999.

Masato Kanda, vice finance minister for international affairs, said the government stands ready to act whenever "appropriate" but declined to say whether it intervened on Monday.

"The moves have been excessive and led by speculators," Kanda told reporters, adding that the negative impact of such rapid fluctuations on the economy "cannot be tolerated."

The Japanese currency was under heavy selling pressure which increased after the Bank of Japan on Friday decided to leave its monetary policy unchanged at a policy board meeting.

BOJ Governor Kazuo Ueda said at a press conference after the meeting that he currently sees no major impact of the yen's recent sharp decline on prices, even as a weaker yen raises the cost of imports.

The Japanese currency was under heavy selling pressure which increased after the Bank of Japan on Friday decided to leave its monetary policy unchanged at a policy board meeting.

BOJ Governor Kazuo Ueda said at a press conference after the meeting that he currently sees no major impact of the yen's recent sharp decline on prices, even as a weaker yen raises the cost of imports.

Market participants are now awaiting the U.S. Federal Reserve's two-day policy meeting starting on Tuesday.

Related coverage:

BOJ downplays weak yen impact, but keeps door open for rate hikes

Japan ready to take necessary steps on yen movements: finance chief