LONDON, May 19: The dollar spiked up against the yen on Monday amid speculation that the Japanese authorities had intervened on the foreign exchange market to stem the rise of their currency.

The dollar surged to 116.69 yen in early afternoon trading in Europe, from an intra-day low of 115.07. The dollar had traded at 115.90 yen late on Friday in New York.

It is either intervention, or fears of intervention, said Adam Cole, currency strategist at Credit Agricole Indosuez, explaining the move.

Commerzbank analyst Kamal Sharma meanwhile said that the dollar had climbed on rumours that the Bank of Japan had been intervening to buy dollars and sell the yen.

The Japanese authorities are thought to be ready to defend the level of 115 yen per dollar in an effort to limit the blow to the country’s exporters of the soaring Japanese unit.

Like the intervention by the Bank of Japan at the behest of the Ministry of Finance in September 2001, May and June 2002 and January, February, and March this year, the intervention this month is intended to forestall a sustained breach of that level, said Paul Chertkow, economist at Bank of Tokyo-Mitsubishi.

Given the plethora of stop-loss orders below 115.00, the Ministry of Finance may well fear a rapid move to 110.00, which would further erode the overseas earnings and competitiveness of Japanese companies, thereby further depressing the Japanese stock market, he said ahead of the dollar’s spike.

Talk of Japanese intervention came despite remarks from US Treasury Secretary John Snow at a weekend meeting with the world’s top finance ministers suggesting that he was comfortable with the dollar’s recent weakness.

So despite the fact that Germany is in recession and the euro-zone economy area as a whole appears to be at a near standstill, the euro is expected to continue its zig-zag higher.

The euro was changing hands at 1.1720 dollars from 1.1581 late on Friday in New York, 134.85 yen (134.39), 0.7159 pounds (0.7145) and 1.5128 Swiss francs (1.5129).

The dollar was being quoted at 115.13 yen (115.90) and 1.2918 Swiss francs (1.3063).

The pound was at $1.6356 (1.6204), 188.37 yen (187.80) and 2.1130 Swiss francs (2.1167).

On the London Bullion Market, the price of an ounce of gold stood at $359.75 from 355 late on Friday. —AFP