By 
The Japanese yen backed away from near 24-year lows on Wednesday, after reports that the Bank of Japan had conducted rate checks on the currency, which is considered the last step before intervention.
The yen
USDJPY,
-0.69%
was recently up around 1% against the dollar at ¥143.04 after a session low of ¥ 144.94, which put it precariously near the crucial ¥145 level. Citing sources, the Nikkei newspaper reported earlier on Wednesday that the central bank had carried out a foreign exchange “check,” asking traders about rates.
The ICE Dollar Index
DXY,
-0.24%
was recently down 0.3% at 109.45, but is up 0.4% for the week.
Investors are reeling from an unexpected jump in U.S. inflation on Tuesday that triggered the worst stock losses in two years and a surge into perceived safe-haven assets such as the dollar. Some are predicting the Federal Reserve could next week raise interest rates by as much as 1%.
“The one thing about a central bank checking rates is it’s the second cheapest way of trying to slow the rise or fall in the value of a currency, without spending any money. The first is jawboning or talking the currency up or down. The Bank of Japan has now done both things.” Michael Hewson, chief market analyst at CMC Markets, told clients in a note.
Down 24% against the dollar so far this year, yen weakness has triggered memories of 1998, when the Bank of Japan intervened during the Asian financial crisis as the currency surged to over ¥146.
“The bigger question is whether the Bank of Japan, in checking rates on the yen, has called the top in the USD/JPY rate. The short answer to that question is no it hasn’t, but it might have slowed it down,” said Hewson.
He said traders will likely be “much more cautious about pushing their luck when it comes to positioning for further US dollar gains through 145.00 toward 150.00.”
“The main reason the Japanese yen is this weak is because of the current policy stance of the BoJ, and the fact that rates are negative at -0.1%,” said Hewson. The central bank is also due to meet next week and may be readying the markets for a shift in monetary policy, said Hewson.
“If they intervene now at a time without altering their current monetary policy settings, they might just as well set fire to the U.S. dollars they offload. It may slow the decline in the yen down, but it won’t stop it,” he said.
Read: Why one economist fears the Japanese yen could be headed for a destabilizing downward spiral
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