Zhitong Finance APP learned that on Monday, the yen rose more than 1% against the dollar, reversing earlier declines after signs of a second intervention in the market between two consecutive monetary policy meetings. The dollar-JPY exchange rate fell to 145.56 at one point, and then rebounded, fluctuating around 148. Last Friday, Japanese authorities reportedly intervened again to support the yen exchange rate.
Japanese Finance Minister Shun Suzuki told reporters on Monday before the yen rose that Japan is facing a difficult confrontation with speculators and cannot tolerate excessive exchange rate fluctuations. He said he will continue to monitor the market with a high sense of urgency and will respond as necessary when needed. However, Suzuki Shunichi refused to confirm whether Japan had intervened in the market again last week.
After a sharp fluctuation on Monday, Japanese Deputy Minister of Finance Masato Kanda also refused to confirm this statement. "I will not comment on whether there has been any intervention at all. As I said before, we will take appropriate measures on July 24 to deal with excessive fluctuations of 365 days a year, 24 hours a day. We will continue to do this."
However, Forexlive analysts pointed out on Monday that the Bank of Japan had absolutely conducted intervention measures on Monday morning. The Japanese Ministry of Finance has a habit of neither confirming nor denying intervention. But when the market is obvious, the market no longer needs an official statement.
yen traders have been preparing for another turbulent week, surrounding rumors of possible interventions last Friday, and the possible impact of the Bank of Japan policy meeting – the next key catalyst for the yen to be in trouble. Economists expect the Bank of Japan to keep its policy unchanged again at the two-day meeting ending on October 28.
According to traders' estimates, the Bank of Japan, known as a "widow-making machine", may have used more than $30 billion (equivalent to about RMB 220 billion) last Friday to conduct a second intervention in a month to support the yen exchange rate. The yen once hit a high of 151.94 yen against the US dollar. By the close of the day, the yen rose against the US dollar in the short term and finally reached 147.64, with the maximum volatility of the day nearly 4%.
Authorities have repeatedly stated that they will take action to deal with unilateral trends, although some analysts warn that the impact of any intervention will be limited as long as the Bank of Japan maintains its low interest rate policy.
In September this year, the Japanese government intervened for the first time since 1998 to support the Japanese exchange rate against the US dollar, when the yen exchange rate fell to 145.90. The agency said it had invested $20 billion in intervention that month, and on the same day, the Bank of Japan maintained a loose monetary policy that exceeded and . "It seems that the actions of the Japanese authorities this morning were not based on real capital flows. While it is difficult to curb the buying momentum of the global dollar, it will help to buy time." The yen exchange rate has dropped sharply this year because traders have focused on the widening yield gap between the U.S. and Japan. The United States launched a massive hike in to suppress inflation, while Japan kept interest rates at extremely low levels to boost the economy. This encourages investors to look for more attractive returns in dollar assets than Japanese assets.
