On April 29, 2024, on a street in central Tokyo, people stood outside a currency exchanger to check the exchange rate of the Japanese yen against foreign currencies.
Richard A. Brooks | AFP | Getty Images
this Dollar Down about 2% against the U.S. dollar yen On Thursday, markets were suddenly shocked by new U.S. inflation data.
The yen was trading at 158.55 against the dollar at around 3pm London time, after being close to 161.52 earlier in the session. Reuters reported that this was the yen’s biggest one-day gain since late 2022.
The dollar gained as the U.S. reacted to its lowest consumer price index (CPI) in more than three years. Some currency experts have highlighted U.S. data for the yen’s moves, with Kit Juckes, global head of FX strategy at Societe Generale, telling CNBC via email that “the yen’s rise is being driven by a combination of heavy short selling and the consumer price index.” CPI ) surprise. Short selling involves betting that the price of an asset will fall.
But this comes at a time when traders are on high alert for further intervention by Japanese authorities in the yen as they try to prop up a weakening yen.
Marc Ostwald, global strategist and chief economist at ADM Investor Services, said there was no concrete evidence of intervention, but added that the massive sell-off in the dollar appeared to be “primarily triggered by yen stops.” The MoF (MoF) is likely to use this opportunity to intervene modestly. “
A stop is a market order that is triggered when an asset reaches a set price.
Masato Kanda, Japan’s finance ministry’s deputy finance minister for international affairs, told Jiji Shimbun he had no authority Comment on any possible intervention. A ministry spokesman could not immediately be reached for comment.
As early as the end of May, Japan confirmed its first currency intervention since 2022 and spent US$62 billion. The department said at the time that Japan had spent 9.7885 trillion yen ($62.25 billion) on currency intervention between April 26 and May 29.
This timeline coincides with the sharp rebound in the yen in previous weeks. On April 29, the yen fell to a 34-year low of 160.03 against the US dollar.
The yen has been under sustained pressure since the Bank of Japan ended its negative interest rate monetary policy in March.
Japanese Finance Minister Shunichi Suzuki backed the need to step in if large exchange rate fluctuations start to affect households and businesses. He declined to comment when asked whether the department had stepped in to support the yen.
The last time Japan intervened to stabilize the yen exchange rate was in October 2022, when the yen fell to a low of around 152 to the dollar. The authorities intervened three times that year to stabilize the currency, reportedly spending a total of 9.2 trillion yen during that period.
Correction: This article has been updated with correct historical data on U.S. CPI.
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