NEW YORK, July 30 (Reuters) - The yen rose sharply against the dollar on Thursday, in a move analysts said bore the hallmarks of official intervention by Japanese authorities to prop up the battered currency.
The dollar fell by as much as 3% to 158.34 , down from 40-year highs hit earlier this week.
It was not immediately clear what drove the market move or whether Japanese authorities were in the market.
Markets have been on alert for yen-buying by Japanese authorities, who have warned of action for months
as currency weakness exacerbates the cost-of-living impact of rocketing energy import prices.
The Japanese finance ministry’s foreign exchange division, which directs intervention, could not be reached immediately for comment.
"There has been a sharp move lower in dollar/yen that strongly suggests official intervention," said Roberto Cobo Garcia, head of G10 FX strategy, at BBVA.
"The pair has broken below the 161 level, and it appears Japanese authorities have taken advantage of the bearish momentum generated by the weaker U.S. data to sell dollars and support the yen."
The move came ahead of the Bank of Japan (BOJ) meeting on Friday, just days after a divided Federal Reserve left interest rates unchanged which sent the dollar sliding.
The yen has received little help from the more than $70 billion in dollar-selling intervention in April and May.
The Japanese currency also tumbled sharply against other peers, falling 2.2% on the euro and 2.1% on the pound.
(Reporting by Saqib Iqbal Ahmed and Takaya Yamaguchi and the Europe, Asia and U.S. markets teams; Editing by Dhara Ranasinghe)
