2 days ago
Yen Breach of 160 Revives Japan Intervention Watch
The yen is Japan’s currency, and it became weaker than 160 yen for one US dollar.
This made traders wonder whether Japan might buy yen again to support it.
Japan already spent $96.4 billion during an earlier effort to slow the yen’s decline.
Experts are watching levels around 161 and 162 to 163 for possible action.
However, Japanese officials say they care more about how quickly and disorderly the yen moves than about one exact number.
The dollar has been strong because investors expect US interest rates to stay high or rise.
Some experts think intervention could slow the yen’s fall but may not reverse it.
Traders also expect the Bank of Japan may raise interest rates, although the articles give different probabilities and timing for that move.
The yen fell beyond 160 per dollar, renewing concern that Japanese authorities could intervene to slow further weakness.
Strategists identified 161 and the 162.9–163.3 range as levels to watch, while officials have emphasized surprise and disorderly moves rather than fixed thresholds.
Japan spent a record $96.4 billion supporting the yen after it reached a four-decade low, but the currency has since surrendered more than half its intervention-era gains.
A broad dollar advance, expectations for higher US interest rates and renewed hedge-fund short positions have pressured the yen.
Markets differed on the timing of a Bank of Japan rate increase, with one article citing 90% odds for September 18 and another citing about 70% for the following month.
- Who
- Japanese authorities, the Bank of Japan, US officials, currency traders, strategists and hedge funds are involved.
- What
- The yen breached 160 per dollar, increasing concern about renewed Japanese intervention and a possible Bank of Japan rate increase.
- Where
- The yen was trading in Tokyo and New York, within international foreign-exchange markets.
- When
- The breach and trading described in the articles occurred on Monday; markets are watching upcoming Bank of Japan decisions, including September 18 in one market estimate.
- Why
- The yen weakened as the dollar broadly strengthened amid expectations for higher US interest rates, while renewed hedge-fund short positions added pressure.
Intervention Could Help
Intervention May Only Delay Weakness
Whether Japan should intervene before a BOJ meeting
Intervention Could Help
Some strategists say authorities do not need to wait if the yen weakens rapidly and intervention risk rises near key levels.
Intervention May Only Delay Weakness
Other analysts say authorities may prefer to see whether an expected Bank of Japan rate increase can help support the yen first.
Effectiveness of intervention
Intervention Could Help
Buying yen could slow sharp or disorderly declines and give policymakers time.
Intervention May Only Delay Weakness
Other market watchers say intervention may struggle to reverse the yen’s trajectory while Japan’s real interest rates remain deeply negative.
What should trigger action
Intervention Could Help
Strategists point to levels around 161 and above 162 as possible intervention zones.
Intervention May Only Delay Weakness
Japanese officials emphasize the speed and disorderliness of moves rather than any fixed exchange-rate threshold; broad dollar strength may also limit the impact.
Key facts
- Monday exchange rate
- The yen traded around 159.69–159.77 per dollar on Monday, compared with about 160.09 at Friday’s New York close.
- Previous intervention spending
- Japan spent a record $96.4 billion over the past month to support the yen.
- Levels being watched
- Strategists cited 161 first, followed by the 162.9–163.3 area; another strategist said intervention risk becomes meaningful above 162.
- Earlier coordinated intervention
- The United States and Japan conducted their first coordinated yen-buying operation since 1998 during the previous intervention.
- Bank of Japan expectations
- One article cited a 90% chance of a rate increase at the September 18 decision, while another cited about 70% for the following month.
- Officials’ stated criterion
- Japanese officials say the speed and disorderliness of currency moves matter more than a specific exchange-rate level.
Quotes
Paresh Upadhyaya
Strategist at Pioneer Investments
“For now, the markets should be on edge for intervention risks. The yen remains acutely vulnerable to moves in US interest rates and broad based swings in the dollar.”
livemint.com
“The BOJ is in a bigger dilemma given that there is a limit to how much it can out-hike market expectations.”
livemint.com
livemint.com
Rinto Maruyama
Senior rates and foreign-exchange strategist at SMBC Nikko Securities
“For key levels, 161 is the first threshold to watch, followed by the 162.9-163.3 area, where the authorities intervened last time”
livemint.com
livemint.com
Sources
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