By Ankur Banerjee and Alun John

SINGAPORE/LONDON (Reuters) – The yen was beneath stress in opposition to most different main currencies on Wednesday, at the same time as Japanese authorities mentioned they might intervene to prop it up, whereas the greenback dropped after information confirmed inflation eased in Could.

Market expectations that the Financial institution of Japan (BOJ) will maintain rates of interest ultra-low, whereas different central banks tighten financial coverage to curb inflation, has been weighing on the Japanese foreign money, driving hypothesis about whether or not and when the central financial institution may step in to stem its declines.

“We’re carefully watching foreign money strikes with a powerful sense of urgency,” Japan’s high foreign money diplomat Masato Kanda advised reporters on Wednesday.

“We are going to reply appropriately if it turns into extreme.”

The U.S. greenback rose to 144.2 yen on Wednesday – a recent seven-month excessive – whereas the euro climbed to a 15-year excessive of 157.94 yen.

The rise within the greenback in opposition to the yen is ready to run additional, that means the chance that Japan’s finance ministry will intervene within the international trade market has elevated, mentioned Carol Kong, a foreign money strategist at Commonwealth Financial institution of Australia (OTC:). Japan’s finance ministry instructs the BOJ.

“Nevertheless, we be aware it’s the pace of change, reasonably than the extent, that issues most within the choice to intervene,” Kong mentioned.

Japan made forays into the foreign money market to prop up the yen final September and October to stem a plunge within the foreign money, which hit a 32-year low of 151.94 to the greenback.

In the meantime, the Australian greenback fell to a three-week low of $0.6618 after the native client value inflation charge slowed to a 13-month low in Could.

The Aussie was final down 0.67% at $0.6641. The fell 1.04% to $0.6098

A measure of core inflation additionally cooled, in an indication rates of interest may not need to rise once more in July.

In Europe, the euro and pound each dipped a fraction in opposition to the greenback to $1.0950 and $1.12733 respectively, and the greenback additionally climbed 0.16% in opposition to the Swiss franc to 0.89505.

Merchants are additionally watching the continuing European Central Financial institution’s (ECB) convention on central banking for any hints from policymakers in regards to the future charge hike path.

U.S. Federal Reserve chair Jerome Powell will take part in a panel afterward Wednesday alongside Financial institution of England Governor Andrew Bailey, ECB President Christine Lagarde and BOJ Governor Kazuo Ueda.