The dollar rose about half a yen against the Japanese currency on Thursday with investors nervous about possible intervention from the Bank of Japan to weaken the yen after it hit a record high.
Traders and analysts were saying that the Japanese authorities were ready for battle.
In the space of four minutes, the dollar rose to a peak of 79.20 yen from a low of 78.65 yen. The U.S. dollar was last down 0.9 percent against the yen on electronic trading platform EBS at 78.92.
The market is very nervous and nervous about intervention of course, so anybody long is really going to be quick to unwind positions, said Omer Esiner, chief market analyst at Commonwealth Foreign Exchange in Washington. The threat of intervention has traders jittery and this could be a little momentum unwind from yesterday's move.
The dollar hit a record low of 76.25 yen as the Thursday Asian trading session opened after a break of the previous record at 79.75 triggered a cascade of automatic sell orders.
(Reporting by Nick Olivari and Julie Haviv, Editing by Chizu Nomiyama)