The yen exchange rate in the Tokyo foreign exchange market on the 30th was in the low 156 yen range to the dollar. On the 29th, which was a public holiday in Japan, the currency briefly fell to the 160 yen level for the first time since 1990, before rebounding sharply, sparking speculation that Japan’s monetary authorities would intervene to buy the yen. There are times when the yen has appreciated by about 1.50 yen during overseas time, and there is continued nervousness regarding the intervention.
On the morning of the 30th, Finance Minister Masato Kanda of the Ministry of Finance declined to comment on whether there was any intervention, but pointed out that “excessive fluctuations caused by speculation have a negative impact on people’s lives.” He said he would be available 24 hours a day. The impact on the yen exchange rate was limited.
Finance Minister Kanda: Responding 24 hours a day, no comment on whether there will be any intervention.
- As of 8:37 a.m., the yen was trading at 156.26 yen against the dollar (as of 5 p.m. on the 26th, it was 156.71 yen).
Takeshi Yamamoto, a researcher at Sumitomo Mitsui Trust Bank’s Americas Market Business Unit (based in New York), pointed out that based on the price movements during Asian time on the 29th and some news reports, “There is a strong view that there was an intervention to buy the yen.” He said, “There is a possibility that there was an intervention at 160 yen, so if the yen is sold back to around 157 yen, the market environment is likely to continue with sensitive and rough price movements like in the afternoon New York time.” .
With domestic investors absent due to the holiday, the yen’s exchange rate on the 29th was weak against the dollar due to the contrast between the Bank of Japan’s dovish monetary policy stance and the US Federal Reserve (Fed), which seems unlikely to cut interest rates. At one point, the price was 160.17 sen, close to the low price reached on April 17, 1990 (160.20 sen), and then rapidly increased by more than 5 yen to 154.54 sen. Markets are nervous over speculation of intervention.
Mr. Yamamoto of Sumitomo Mitsui Trust Bank points out that the imbalance between the Bank of Japan and the Ministry of Finance, which remain calm in response to the impact of the weaker yen, is making it easier to sell the yen. Even if intervention had been carried out this time, there would be strong selling pressure on the yen, and he said, “Even in 2022, there were about three intermittent interventions, and there is a risk that they will be carried out several times in the future.”
This week, important events such as the Federal Open Market Committee (FOMC) meeting and employment statistics are coming up in the United States. “The FOMC may be discussing whether it is possible to cut interest rates once this year, and it is likely that U.S. indicators will confirm that the economy remains strong,” Yamamoto said. We predicted that there is a risk that the yen will re-test 160 yen within the week due to US factors.
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