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16/07/24
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JPY Rise Likely Due to Intervention
On Tuesday, the Japanese yen inched down, and USD/JPY traded at about 158.42, up 0.28% for the day in the European session.
The Bank of Japan has been attempting to discourage currency speculators wanting to take advantage of the yen’s decline. Based on an analysis of BoJ accounts, it is suspected that the BoJ had last Thursday intervened in currency markets to the tune of about $22B.
This suspected intervention happened soon after the June inflation report for the US was released. The lower-than-expected inflation reading pushed the US dollar lower against other major currencies and the BoJ possibly intervened while the yen was strengthening versus the US dollar.
This tactic would be a new one for the Bank of Japan, which has intervened when the yen was dropping in the past. This caught markets by surprise as the BoJ is attempting to find new methods to deter currency speculation.
The intervention on Thursday pushed the yen to 157.44 against the dollar from 161.58, a huge gain of 2.4% for the yen, which was also bolstered by the soft inflation report.
Masato Kanda, Japan’s chief currency diplomat, wouldn’t comment on possible intervention by Tokyo, as officials are determined to keep market participants unaware of currency interventions.
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