(Bloomberg) -- The yen soared the most against the dollar since March 2020 as Nikkei reported Japanese authorities intervened again to prop up the currency.

The yen jumped as much as 2.7%, to 146.23 per dollar, reversing an earlier drop that had sent it to a fresh 32-year low of 151.95 on Friday. The currency traded around 147.35 per dollar as of 4:20 p.m. in New York. 

Nikkei reported the surge on the yen was caused by another intervention from Japanese authorities on the currency market, citing an unidentified person. It said that Finance Ministry Vice Minister Masato Kanda, Japan’s top currency diplomat, told reporters he would not comment on whether an intervention had taken place. Another finance ministry official reached by Bloomberg News declined to comment on intervention.  

Speculation about further action came after a barrage of official warnings from Japan against testing its intervention strategy. Authorities have repeatedly said they would step in to counter one-sided moves, although some analysts warned that any intervention would have limited impact as long as the Bank of Japan maintains a policy of rock-bottom interest rates while peer central banks hike. 

“This looks to have been significant and persistent dollar selling, way bigger than we have seen previous in these recent efforts to stem yen losses,” said Shaun Osborne, chief foreign-exchange strategist at Scotiabank. 

The yen started to surge around 10:30 a.m. New York time, well after the close of Japanese markets. About $25 billion yen futures were traded at the Chicago Mercantile Exchange in the following two hours, on pace for the biggest daily volume since November 2016.

Friday’s rally on was also aided by a broader weakness in the dollar and lower US Treasury yields after the Wall Street Journal reported that some Federal Reserve officials were concerned about overtightening. 

In September, the Japanese government intervened to support the currency for the first time since 1998 after it weakened to 145.90 per dollar. The Ministry of Finance spent almost $20 billion that month to limit the currency’s losses.

Read more: Yen Intervention Sparks Speculation Over Japan’s Funding Moves

Finance Minister Shunichi Suzuki, speaking to reporters this week, reiterated the country would take appropriate action against speculative moves. Still, Bank of Japan Governor Haruhiko Kuroda has made clear he has no intention to change the rock-bottom interest-rate policy that is contributing to the yen’s slide.

This means all eyes are on BOJ’s policy meeting next week. Last month’s intervention to support the yen took place after Kuroda reiterated his willingness to stick with super-easy policy in the form of yield curve control, known as YCC. 

“Currently the problem with intervention is that even as FX intervention drains yen out the market, the BOJ’s bond intervention adds yen liquidity,” said Alan Ruskin, Deutsche Bank AG’s chief international strategist. “To have a longer-term multi-week or multi-month impact, intervention needs support from fundamentals, probably either in the form of a shift in US rates, or Japan YCC.”

Earlier Friday, US 10-year Treasury yields surged above 4.3% to the highest since 2007, compared with Japan’s 0.25% yield for similar-maturity notes. US yields reversed course later after the WSJ reported the Fed is likely to debate whether to signal a smaller hike is possible at the December meeting. The Fed raised its policy rate by three percentage points since March, with another three-quarter-point increase anticipated next month.

Intervention won’t stop the yen from weakening further because “they are rowing upstream against fundamentals: high energy prices and rate differentials,” said Alex Etra, a senior strategist at Exante Data Inc.

Data this week showed that Japan’s trade deficit topped 2 trillion yen ($13.5 billion) for a second-straight month as the weaker yen pushed up the import bill. 

--With assistance from Liau Y-Sing, Leda Alvim, Robert Fullem, Masaki Kondo and Emi Urabe.

(Updates with Japan government officials declining comment in third paragraph)

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