The yen exchange rate fell below 155, and the market wondered when the intervention would enter

Finance Associated Press

2024-04-25 00:42Published on the official account of Cailianshe under Shanghai Poster Industry Group

Finance Associated Press, April 24 (edited by Zhao Hao) On Wednesday (April 24) in early New York trading, the dollar rose about 30 points against the yen in the short term, reaching a high of 155.17, which was also the first time that the yen exchange rate fell below the 155 mark since June 1990. As of press time, USD/JPY was trading at 155.12.

In the past two weeks, the yen has fallen below the two round number marks of 153 and 154 one after another, and today's fall below 155 further exacerbated the risk of the Japanese government's intervention. Win Thin, global head of market strategy at Brown Brothers Harriman, a U.S. investment bank, said that intervention risks have been at a very high level.

Last Wednesday (April 17), the finance ministers of the United States, Japan and South Korea issued a joint statement saying that policymakers are watching the currency market, while acknowledging concerns about the recent depreciation of the South Korean won and the yen, and agreeing to work closely together on the development of the foreign exchange market.

Analysts believe that the joint statement may be aimed at controlling the foreign exchange market and pushing up the possibility of joint intervention in the market. Yesterday, Japanese Finance Minister Shunichi Suzuki, who attended the meeting, also said that "for excessive fluctuations, we will not rule out any options and make appropriate responses." ”

Year-to-date, the yen has lost 9% of its value against the dollar, making it the worst performer in the G10. In particular, the situation in the Middle East has pushed up international crude oil prices denominated in US dollars, which could deal a blow to Japan's trade balance.

In March, the Bank of Japan (BOJ) made a historic move to unwind its massive monetary easing, including negative interest rates and YCC, but the level of tightening was nowhere near comparable to that of the Fed, which has raised interest rates by a cumulative 525 basis points. While the market expects that the Bank of Japan is likely to raise interest rates again, the probability of action this Friday is not high.

Piotr Matys, senior FX analyst at InTouch Capital Markets Ltd., acknowledges that a "Friday rate hike" is a low-probability scenario, but believes that it makes more sense to take an unexpected approach than a foreign exchange intervention, "because the most effective way to stabilize a currency is to raise interest rates unexpectedly." ”

On the same day as the Bank of Japan's decision, the US will later release a report on personal consumption expenditures, which will include the Fed's favorite inflation gauge, the core PCE price index. If the PCE result exceeds expectations, it may cause the Fed to postpone the timing of the first interest rate cut again, which in turn will push the dollar higher and weigh on the yen.

Jane Foley, head of FX strategy at Rabobank, said: "Japan's finance ministry may hope that the Bank of Japan will make some hawkish comments after Friday's policy meeting. But a strong US PCE later in the day will strengthen the dollar's momentum. ”

(Finance Associated Press Zhao Hao)

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