The Japanese yen rose 1% against the dollar on Wednesday September 14 after the Bank of Japan conducted a rate check in preparation for currency intervention, while investors digested U.S. producer prices data. On Wednesday, investors weighed data showing U.S. producer prices fell for the second straight month in August. It also showed underlying producer inflation rising moderately last month.

In a rate check, Japan’s central bank officials call up dealers and ask for the price of buying or selling yen. However, actually intervening to support the currency would be a larger step.

Japanese Finance Minister Shunichi Suzuki said that recent yen moves have been "rapid and one-sided", adding that yen-buying currency intervention was among the government's options should such moves continue.

As we outlined, the very fact that BoJ did a rate check overnight probably indicates its higher determination toward currency intervention. But just intervention by itself isn’t going to be all that successful beyond an immediate short living market reaction.

The recent sharp gains in the dollar versus the yen (USDJPY) have been reportedly linked to the hawkish stance from the Federal Reserve in raising interest rates to control inflation. The dollar hit a 24-year peak against the yen last week.

Later on, however, the greenback dropped against the yen propped up by news of the rate check. It was last down 1% at 143.56 yen, hitting a session low of 142.6 in the wake of the PPI data.

The DXY dollar index, meanwhile, was down 0.1% as of the latest reading at 109.77, a day after registering its largest daily percentage gain since March 2020 on an unexpected rise in the U.S. Consumer Price Index (CPI).