Receive Free Yen Updates
We will send you a myFT Daily Summary email summarizing the latest Yen news every morning.
The Japanese yen fell against the dollar on Friday, briefly touching a low last crossed seven months ago and reigniting speculation that Tokyo authorities were closing in on an intervention to support the currency.
THE yen fell about 0.2% to ¥145.07 per dollar in morning trading in Asia, breaking through the ¥145 level for the first time since mid-November and close to the ¥145.8 level that prompted the Japanese Ministry of Finance to intervene last September.
In response, JapanFinance Minister Shunichi Suzuki repeated the language used by the government in recent days as it stepped up its verbal intervention. Suzuki told reporters he was monitoring currency markets with a “high sense of urgency” and promised authorities would take “appropriate action” if the yen weakened excessively.
“The market perception is that we are approaching uncomfortable levels, and recent statements from the (treasury department) echo the build-up to last year’s intervention,” Benjamin Shatil, currency strategist at JPMorgan told Reuters. Tokyo.
Currency traders said if the yen continued to fall, the government would use phrases that in the past represented the highest level of verbal intervention. Another signal would be a three-way meeting between the Bank of Japanthe Ministry of Finance and the Financial Services Agency, the regulator.
Forex traders said they were alert to any signals that the BoJ was carrying out “rate checks”, a precursor to an intervention in which the central bank privately asks trading floors about the likely cost and impact of the government’s entry into the market.
These rate controls preceded two major intervention periods last year in September and October, when authorities spent a total of $65 billion on yen purchases in a bid to lift the currency from 30-year lows. years and protect Japanese consumers from soaring inflation on imported energy. and the food.
“We haven’t heard of a rate control yet, but once the yen hits ¥145, you have to consider it a possibility,” said a trader at one of the Japanese banks consulted ahead of the news. last year’s interventions.
JPMorgan’s Shatil said the fundamentals behind the yen’s slide suggested it needed to drop further. The United States remains in a monetary tightening cycle, while the BoJ remains committed to its ultra-accommodative policy.
Yujiro Goto, a currency strategist at Nomura Securities, said the yen probably didn’t fall far enough or fast enough to trigger intervention, but the likelihood of that happening was “clearly increasing.”
