1 hr ago
Yen Surge Keeps Traders Alert for Further Official Action
The yen is Japan’s currency, and it rose quickly against the US dollar.
This made traders wonder whether government officials had stepped in to help it.
No one confirmed that an intervention happened on Wednesday.
The yen also strengthened after a Bank of Japan official said interest-rate increases could be larger or happen one after another.
Japan and the United States had already worked together recently to buy yen.
Japan spent $96.4 billion on that support during the past month.
Investors are still watching because the yen has been weak for several reasons.
They are also waiting to see whether the Bank of Japan raises interest rates soon.
The yen rose as much as 1.2% to 158.22 per dollar in New York trading on Wednesday.
The move sparked speculation that Japanese or US officials may have conducted a currency-rate check, but no intervention was confirmed.
Bank of Japan board member Hajime Takata said a 25-basis-point hike was not fixed and that back-to-back hikes were possible.
Japan spent a record $96.4 billion over the past month supporting the yen after it reached a roughly four-decade low.
The yen remains pressured by Japan’s interest-rate gap, fiscal concerns and renewed hedge-fund bets against the currency.
- Who
- Japanese and US authorities, Bank of Japan officials, currency traders and investors.
- What
- The yen surged, prompting speculation about further official support and a possible Bank of Japan rate hike.
- Where
- In New York trading and across global currency markets, including Japan and the United States.
- When
- On Wednesday; related intervention occurred during the past month, with a possible rate decision later this month and a hike priced for September.
- Why
- The yen has been weakened by Japan’s interest-rate gap, fiscal concerns and speculative short positions, while officials have sought to limit disorderly currency moves.
Intervention Signals
Intervention Skepticism
Did officials act Wednesday?
Intervention Signals
The yen’s sudden rise led traders to speculate that officials were contacting banks to check the exchange rate, a step sometimes associated with intervention.
Intervention Skepticism
The Treasury and New York Fed did not comment, and a Monex trader said the move was probably too small to indicate intervention.
How should policy respond?
Intervention Signals
Japanese officials have signaled that they may act against rapid or disorderly currency moves, while a Bank of Japan board member opened the door to larger or consecutive rate hikes.
Intervention Skepticism
The yen remains constrained by Japan’s wide interest-rate gap and fiscal concerns, and hedge funds have begun rebuilding short yen positions.
Key facts
- Yen’s intraday gain
- As much as 1.2% against the dollar
- Yen exchange rate
- 158.22 per dollar at the session’s peak
- Recent Japanese support
- Japan spent $96.4 billion over the past month
- Recent coordinated action
- Tokyo and Washington conducted their first coordinated yen-buying operation since 1998
- Possible monetary-policy change
- Bank of Japan board member Hajime Takata said a 25-basis-point hike was not necessarily fixed
- Market pricing
- Overnight index swaps price in a Bank of Japan rate hike at the September meeting
- Currency-market scale
- The global currency market is valued at about $9.5 trillion per day
Quotes
Andrew Hazlett
Foreign-exchange trader at Monex Inc.
“The market got the message that the authorities want a stronger yen.”
livemint.com
“I am skeptical based on the size of the move”
livemint.com
Sources
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