When the US September inflation data exceeded expectations again and was above 8% for the seventh consecutive month, the US dollar continued to rise against the yen last Friday, setting a 32-year high of 148.86. During today's Asia-Pacific period, the US dollar against the Japanese yen was 148.59. Although the yen rebounded, it is still far from the 145.90 point that triggered the Japanese government's foreign exchange intervention last month. Meanwhile, the implicit volatility of the US dollar against the Japanese yen also rose again.
For this reason, the market once again pays close attention to how likely the Japanese government will take action again to prevent the yen from falling. However, the market also expects that even if the Japanese side intervenes again, its support effect on the yen will be limited.
150 is the key point?
Some market insiders said that Japanese officials may not necessarily have a specific intervention point line. Compared with specific points, they may pay more attention to the speed of the depreciation of the yen. But some analysts say the 150 is a key psychological point for Japanese citizens, and touching this point may put pressure on the Japanese government to take action again.
Last month, after the yen hit 145.90 against the US dollar, the Japanese government used 2.84 trillion yen (about 19.6 billion US dollars) to carry out its first foreign exchange intervention since 1998 to support the yen. Roberto Mialich, a strategist at United Credit, wrote in a recent report: "The market may further raise the intervention threshold to 150, and many investors suspect that this is the largest drop in the yen that the Japanese authorities may tolerate at present." Due to the monetary policy, the yen has widened the interest rate spread against the US dollar so far this year. The re-depreciation of the yen last week has erased the rebound of the yen after the intervention last month and recorded its eighth consecutive week of closing down, the longest continuous decline since May.
In fact, more and more Japanese government officials have released the "test argument" of re-intervention.
Japanese Finance Minister Suzuki Shunichi 17 reiterated again that Japan is ready to take "decisive" actions against the rapid decline of the yen. He said: "We have always been paying attention to the trend of forex market with a sense of urgency. If speculators or others cause excessive fluctuations in the forex market, our position will never change and we will take bold actions."
Deputy Governor of the Bank of Japan Masazumi Wakatabe also said last Saturday that the recent fluctuations in the yen are "apparently too fast and too one-way." Masato Kanda, the top Japanese official in charge of foreign exchange affairs, said on Monday that the G20 Finance Minister and the Governor of the Central Bank of agreed at a meeting last week on Washington that volatility in exchange rate is intensifying, and the implicit volatility of the yen has climbed from its recent lows in a week, and that Japan will firmly deal with any excessive currency fluctuations.
Foreign exchange strategist Carol Kong at the Commonwealth Bank of Australia (CBA) said: "Given that many Japanese government officials have made strong statements recently, I think the risk of the Bank of Japan intervening in the foreign exchange market is very high." The re-hit of the implicit volatility of the yen by the US dollar of
against the yen also gives the Bank of Japan more reasons to intervene again. Previously, after the Bank of Japan's first intervention in the foreign exchange market, the implicit volatility fell sharply in the week, but it began to rise again last week. Mialici said that market tensions will continue as the implicit volatility of the US dollar against the yen remain high for the week. Kong also pointed out: "Given that the multilateral statement of the G20 does not want disorderly currency fluctuations, if the intervention of the Japanese government is regarded as responding to excessive foreign exchange market fluctuations, this intervention will not be difficult to obtain default support."
"There is no clear definition of what degree is considered excessive foreign exchange market fluctuations and what catalysts for intervention actions." Yukio Ishizuki, senior foreign exchange strategist at Daiwa Securities, said: "So, although Japan previously stated that it would pay more attention to the speed and fluctuation of the depreciation of the yen to determine the time of intervention, it may still be triggered by a specific point in the end. If the US dollar rises to nearly 150, there will be a lot of noise in Japan, which may force the bureau to take action."
has limited intervention effect?
. While closely monitoring the next intervention point of the Japanese government, the market also believes that the intervention effect is expected to be limited.
" Considering the liquidity of the entire money market, the scale of monetary intervention by Japan to prevent the sharp decline of the yen last month was a very small amount. Therefore, this seems more like a signal-like action to calm the market, but the impact of such actions is often short-term. "When there is an intervention, it will indeed slow down the depreciation of the yen, just like that in September," Sanjaya Panth, deputy director of the Asia-Pacific Department of the International Monetary Fund (IMF). But historically, the impact of such interventions will not last long. "
Hideo Kumano, chief economist at the Dai-ichi Life Research Institute, said: "The Japanese authorities did not make it clear whether they would intervene, but instead allowed the market to continue speculation, which could curb the decline of the yen. But until Kuroda Haruhiko step down as the governor of the Bank of Japan in April next year, the Bank of Japan's policies will not change. Therefore, from now on, this exchange rate war does not depend on the scale of the intervention, but will be more of a psychological war. "
Some analysts also pointed out that Japan's foreign exchange intervention will be affected by the amount of foreign reserves. Shusuke Yamada, a strategist at Bank of America, wrote in a research report that the Japanese Ministry of Finance may provide funds for the intervention last month by selling short-term US Treasury bonds (T-Bills), etc. But in the end, the Japanese government has to use foreign reserves or sell longer-term US Treasury bonds, which will add obstacles to further intervention. "Selling the US dollar to support the yen will be restricted by multiple factors such as the scale of the US dollar held by Japan, the impact of intervention on Japan's overall foreign reserves liquidity , and the impact of intervention on the U.S. interest rate market. "He said.
More importantly, even if non-U.S. currencies, including the Japanese yen, are hit by a strong dollar, last week's G20 meeting showed that this time, there will be no "new square agreement".
Suzuki Shunichi said at a press conference after the G20 Finance Ministers' Meeting last week: "Many countries believe it is necessary to be vigilant about the spillover effect of global currency tightening, and mentioned exchange rate changes in this context, but there is no discussion on what coordination measures can be taken to deal with it. "U.S. Treasury Secretary Yellen (Janet Yellen ) has made it clear that the United States has no intention to take joint foreign exchange intervention actions. She said that the overall strength of the dollar is a "natural result of the different pace of currency tightening between the United States and other countries." When asked whether he would consider signing the " Plaza Accord 2.0" (Plaza Accord 2.0), she said: "I have repeatedly stated that I think the value of the dollar determined by the market is in the interests of the United States, and I still hold this view now." "Handle intervention alone cannot reverse the downward trend of the yen," said Daisaku Ueno, chief foreign exchange strategist at Mitsubishi UFJ Morgan Stanley Securities. Once the yen falls below 150 against the US dollar, this downward trend may be difficult to stop at this point, with the next technical support at around 160. ”
