This paper examines how currency market deregulation affects the behaviors of the yendollarexchange rates in Tokyo, London, and New York. Using the intraday return (open toclose) data, we find strong and consistent evidence that the three currency markets interactsignificantly, both before and after deregulation. For each of nine contracts, Tokyo positivelyaffects London and New York, London positively affects New York and Tokyo, and New Yorkpositively affects Tokyo and London. In particular, the causality relationship is much strongerwhen one market trades right after another. When comparing basic statistics between the preandpost-deregulation periods, we find that, after deregulation, the volatility of the yen-dollarexchange rate intraday returns increases, the range of the intraday returns broadens, thedistribution of these returns becomes more left-skewed, and the distribution of the intradayreturns moves further away from normality. These deregulation-induced changes hold true forall three markets and for most of nine contracts. We interpret our findings as evidence thatforeign exchange deregulation encourages more participation and hence more competition,leading to a more efficient and unpredictable exchange rate in each currency market.