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NEW YORK: The dollar was slightly higher on Monday following another suspected foreign exchange intervention by Japan, while sterling dithered after Britain’s Conservative Party settled on its third leader this year and China’s offshore yuan fell to a record low.

The yen hit a low of 149.70 per dollar overnight before being swept to a high of 145.28 within minutes in a move that suggested the Bank of Japan (BOJ), acting for Japan’s Ministry of Finance, had stepped in again.

The yen was last at 148.825, down 0.71% against the greenback.

Yen overnight volatility surged to its highest since Sept. 21, the day before the BOJ stepped in to prop up the currency for the first time since 1998.

Japan likely spent a record 5.4 trillion to 5.5 trillion yen ($36.16 billion to $36.83 billion) in its yen-buying intervention last Friday, according to estimates by Tokyo money market brokerage firms.

Sterling see-sawed after former Chancellor Rishi Sunak emerged as the next leader of Britain’s Conservatives, clearing the way for him to become the country’s next prime minister.

“However Sunak’s premiership unfolds, there are likely to be more difficult times ahead for the UK economy as it grapples its way out of a worsening downturn and even the prospect of a general election,” said Giles Coghlan, chief market analyst at HYCM.

“That said, there is one aspect of help for the GBP that is often overlooked. On the other side of the Atlantic, a slowdown in Federal Reserve policy would likely help lift the GBP as much, if even not more, than UK fiscal policy.”

Sterling was last up 0.01% at $1.13105, off an overnight high above $1.14.

The dollar held firm after the suspected BOJ intervention, but weakened, briefly turning negative, after data showed U.S. business activity contracted for a fourth straight month in October, the latest evidence of an economy softening in the face of high inflation and rising interest rates.

In September, the Fed delivered its third straight 75-basis-point rate hike, and a fourth hike of that size is expected at next week’s policy-setting meeting, though how aggressive policymakers remain after that is up for debate.

At 10:40 a.m. EDT (1440 GMT), the dollar was up 0.72% at 111.91 against a basket of six peer currencies.

The euro was last up 0.18% at $0.988, while China’s offshore yuan plummeted to a new record low against the dollar of 7.3322.

Chinese President Xi Jinping secured a precedent-breaking third leadership term, picking a top governing body stacked with loyalists. Xi is likely to stick to his zero-COVID policy and could favor the state over private-sector growth, analysts say.

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