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12/07/24
166
JPY Steady After Massive Gain
On Friday, the Japanese yen inched down after posting massive gains the prior day. USD/JPY traded at about 159.16, up 0.26% for the day in the European session.
On Thursday, the US dollar was lower against most other currencies, after a softer-than-expected US CPI print increased expectations for a rate cut in Sept.
The yen was the biggest winner of the day and surged by 2.7%, rising to 157.41 versus the dollar. The US dollar managed to recover some of those losses and USD/JPY closed at 158.76, 1.8% lower for the day.
Although the US dollar experienced a bad day on Thursday, the extent of the decline against the yen fueled speculation that the Japanese government had intervened in the currency markets. Japanese TV reported that the Bank of Japan and the government had intervened after the US dollar declined after the US inflation report.
When asked about whether Tokyo had intervened on Thursday, Japan’s top currency diplomat, Masato Kanda, declined to comment. Japan engages in a continuous cat-and-mouse game with yen speculators and it deliberately does not inform market participants about currency interventions.
With the Bank of Japan indicating that it is planning to tighten policy, there will likely be more volatility in the Japanese currency.
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