TOKYO, May 29 — As Japan’s yen drifts back to levels that prompted official intervention a month ago, markets are sizing up Tokyo’s remaining financial firepower and...
Japan’s yen slid to 159.65 against the US dollar, approaching the April 30 level that triggered official intervention. Tokyo spent roughly US$63 billion in late April and early May to defend the currency.
— Reuters pic! Plus, enjoy an additional FREE RM10 when you sign up using code VERSAMM10 with a min. cash-in of RM100 today. T&Cs apply. TOKYO, May 29 — As Japan’s yen drifts back to levels that prompted official intervention a month ago, markets are sizing up Tokyo’s remaining financial firepower and political will to defend its ailing currency.
Japan spent about US$63 billion in what were suspected to be multiple bouts of yen-buying intervention at the end of April and early May, a small fraction of its US$1 trillion war chest. But traders think that spending all of that, or even much of it, is unrealistic. And as speculative bets against the yen creep up again, authorities will be looking to keep markets on edge.
“The more foreign reserves shrink, the more vulnerable Japan looks to speculators,” said Daisaku Ueno, chief foreign exchange strategist at Mitsubishi UFJ Morgan Stanley Securities. With yen-selling pressure showing no sign of easing, “the war of nerves between the authorities and the market looks set to continue. ” Yen-buying intervention requires selling foreign assets, of which Japan held about US$1 trillion at the end of April.
After subtracting the roughly ¥10 trillion deployed in the April and May actions, based on calculations of Bank of Japan money market data, that leaves about ¥150 trillion, or enough for “around 30 rounds” of intervention, according to Goldman Sachs economist Yuriko Tanaka. But exhausting all of Japan’s foreign assets wouldn’t be feasible, particularly as it would negatively impact the value of US Treasuries at a time when cooperation from the United States is critical.
The US Treasury conducted so-called “rate checks” that helped nudge the dollar-yen rate down in January.
“US understanding is crucial” to sustaining the impact of any intervention, said Takeshi Ueno, a senior economist at NLI Research Institute. If Washington were to push back on such activity, it “could invite speculative yen selling. ”Another potential check on intervention is an International Monetary Fund standard whereby a country that steps into markets too often can risk losing its “free-floating” exchange rate status.
But chief currency diplomat Atsushi Mimura has said the IMF rules served as no constraint on how many times the government can intervene.
“The thinking is that curbing excessive volatility takes priority,” said Akira Moroga, the chief market strategist at Aozora Bank. Even if Japan were to lose its free-floating currency classification, “I don’t think they care at all,” he added. The yen slid to 159.65 yesterday, the weakest since April 30 when Japan is suspected to have made its first intervention in almost two years.
The Ministry of Finance is scheduled to announce at 1000 GMT today the total amount spent on foreign exchange intervention since April 28. Japanese Finance Minister Satsuki Katayama today again declined to comment on whether her agency had intervened, repeating that officials were ready to take “decisive action. ”The yen has been battered by the three-month-long Middle East crisis, with soaring energy prices delivering a terms of trade shock to Japan, which imports almost all its oil.
That exacerbated an already weakening trend amid the BOJ’s cautious approach to raising interest rates and expectations of expanded fiscal stimulus under Prime Minister Sanae Takaichi. Whereas previous Japanese administrations have focused on the speed of change in deciding whether to intervene, the current government appears more centred on defending the 160 per dollar line. Rather than fearing intervention, some market participants are now positioning for it.
A dealer at a domestic bank said buy orders for dollars are clustering in the ¥155-157 per dollar zone, reflecting real dollar demand among importers as well as speculative positions. On the top side, market expectation is that the next intervention will come before the 162 level.
Japan Yen Daisaku Ueno Mitsubishi UFJ Goldman Sachs Atsushi Mimura
United States Latest News, United States Headlines
Similar News:You can also read news stories similar to this one that we have collected from other news sources.
Mitoma blow will not stop Japan dreaming of World Cup glory, says coach MoriyasuTOKYO, May 27 — Japan coach Hajime Moriyasu believes his team can win the World Cup after historic friendly wins over Brazil and England, despite the loss of Kaoru Mitoma...
Read more »
Taiwan capital hits highest temperature on record for May: weather agencyPARIS, May 27 (Reuters) - Cyrille Bollore, chief executive of the Bollore Group, said on Wednesday he was urging Universal Music Group's management to reject Bill Ackman's takeover proposal, citing three key objections: the price was too low, the deal used UMG's own money rather than Ackman's, and Ackman's management style was incompatible...
Read more »
Genting Highlands Toll to Start Charging from 28th May 2026The Genting Highlands toll will start charging from 28th May 2026, with the second phase starting on 28th June 2026. The charges will be collected when motorists enter through Genting Sempah or through Gohtong Jaya. All permitted vehicles, except exempted categories, are required to pay upon entering Genting Highlands.
Read more »
Chinese Robots Steal Show at Tokyo Humanoids SummitAt the Humanoids Summit Tokyo, Chinese robotics companies overshadowed established players like Boston Dynamics, showcasing affordable humanoids that threaten Japan's leadership in the field.
Read more »