Investing.com– The Japanese yen firmed sharply against the dollar on Wednesday and Thursday, with the USDJPY pair dropping to an over one-month low amid speculation that the government had intervened in currency markets. 

The pair, which gauges the number of yen needed to buy one dollar, fell 0.3% to 155.75 yen in morning trade on Thursday. This came after the pair slid 1.7% in the prior session, extending a sharp decline seen since last Friday. Before that, the pair had risen as far as a 38-year high of near 162 yen. 

Traders attributed the yen’s reversal to likely intervention by the government, after repeated warnings from government officials that they will intervene in the event of excessive volatility in currency markets. 

Bank of Japan data suggested that Tokyo may have spent 2.14 trillion yen ($13.5 billion) intervening in currency markets last week. 

While the yen did see some relief from increasing bets that the U.S. Federal Reserve will begin cutting interest rates in September, its outsized gains could potentially be attributed to government intervention. Japanese officials gave no clear signals that they had stepped in. 

But the did fall sharply in recent weeks on growing speculation over a September rate cut, following soft inflation data and a string of dovish signals from the Fed.

The Japanese government was seen last intervening in late-April and early-May, when the USDJPY pair had crossed the 160 level. The yen has been battered by persistent signs of weak Japanese economic growth, which in turn is expected to limit the BOJ’s ability to tighten monetary policy.