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27/06/24
105
JPY Remained Sustained Below 160
The JPY has been sustained below 160, with USD/JPY trading at 160.38 around 1:15 p.m. (GMT) on June 27, representing a 0.25 percent decline. The pair had dropped to a low level of 160.87 on June 26, representing the lowest in 34 years.
This has raised concerns that Japan’s apex bank will engage in another intervention in the currency markets to stop the rapid depreciation. Markets believed that the Bank of Japan intervened on April 29 and May 1, selling some $61bn and buying JPY.
The dwindling currency fell to a low level of 160.20 on April 29, prompting the intervention. The interventions gave the JPY some cushion for a while and has not been able to stop its steep depreciation.
On June 26, Japan’s top currency diplomat Masato Kanda said the JPY’s rapid deprecation was a “serious concern” and events are being monitored with a “heightened sense of urgency”. However, verbal intervention may not be able to save the JPY from falling.
The rate differential between Japan and the United States will remain wide, with the Fed not cutting interest rates prior to September, as Japan’s interest rates are close to zero. Hence, the summer may be unfavorable for the JPY.
Japan’s retail sales rose on a year-on-year basis by 3.0 percent last month relative to April’s revised 2.4 percent gain and higher than the 2.0 percent forecast. This represents the 26th consecutive month of expansion, as consumer spending was strengthened due to higher wages.
A look at the chart of USD/JPY shows a visit to the support level at 160.43, as well as another support level at 160.00. Likewise, there is a barrier level at 161.26 on the way upward, followed by another at 161.69.
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