Currency markets are once again focused on the Japanese yen as traders brace for potential interventions reminiscent of September 2022. Back then, Japan stepped in to support its currency following a central bank decision that upheld accommodative monetary policies. The current scenario sees the yen weaker than before, with U.S. interest rates unlikely to decrease soon.
Recent remarks by Masato Kanda, the top currency official at the Finance Ministry, suggest that ¥157.60 against the dollar is a key level to monitor. Despite the yen’s decline, there have been no indications of intervention yet, even as it surpassed ¥155 per dollar in London trading for the first time in over thirty years.
The upcoming release of the Bank of Japan’s policy statement and forecasts, as well as Ueda’s news conference, are crucial events. Additionally, the U.S. Federal Reserve’s inflation gauge data and upcoming public holidays in Japan could introduce volatility.
Traders are attentive to the yen’s movements, particularly if it continues to depreciate against the dollar. Tsutomu Soma, a trader at Monex, believes that intervention is likely if the yen falls significantly, triggered by events such as the BOJ’s decision.
The effectiveness of intervention, however, depends on the BOJ’s policy announcement. Finance Minister Shunichi Suzuki emphasized his monitoring of the foreign exchange market but refrained from detailed comments.
While the yen has depreciated significantly this year, the trilateral statement from the U.S., Japan, and South Korea indicates ongoing consultations on currency market developments. Makoto Noji, chief strategist at SMBC Nikko Securities, suggests that the government may be preparing to address yen-selling pressures following the BOJ’s decision.
Overall, the yen’s future trajectory remains uncertain, hinging on various economic and policy factors both in Japan and abroad.
(Source: Japan Times | CNBC | Bloomberg)
