The Japanese yen strengthened sharply on Thursday as traders watched for signs of intervention and increased their bets on more aggressive rate rises by the central bank this year. Japan also successfully sold a tranche of 30-year government bonds, helping to ease investor fears after a sell-off this week in global bond markets that had pushed big economies’ borrowing costs to their highest in years. The yen and Japanese government bonds are being closely watched by investors as concerns grow over plans by Prime Minister Sanae Takaichi to increase public spending and the selling pressure that its bond sell-off is putting on other markets.

The currency jumped by 1.4 per cent on Thursday to ¥156.40 to the US dollar, building on a 0.9 per cent gain on Wednesday, with investors on high alert for evidence that Japanese authorities were intervening in foreign exchange markets once again. The move by the yen was broad based, with the currency also rallying against the euro and the British pound. A rare joint intervention by Japanese and US authorities in July and August had significantly boosted the yen’s value to about ¥155, but it had given up much of those gains to trade at about ¥160 in recent days.

On Thursday, traders and analysts suggested that while the moves could be intervention by the Japanese government, it was also possible that the market was simply repricing the chances of rate rises by the central bank this year.