Japan authorities may have intervened again to shore up yen

The Yomiuri Shimbun
The yen-dollar exchange rate is seen at Gaitame.com Co. in Minato Ward, Tokyo, on Monday.

The Japanese government and the Bank of Japan may have intervened again to shore up the yen, which temporarily surged about ¥4 against the dollar on Monday morning.

The yen soared from the upper ¥149 level to the ¥145 range at one point. If an intervention did take place, it followed close on the heels of the action taken on the weekend. The war of nerves between the Japanese government and the currency market is intensifying, with the yen continuing to fluctuate sharply.

When the New York market closed on Friday, the yen was being traded in the upper ¥147 level against the dollar. The selling of yen and buying of dollars started early Monday morning in the global currency markets, pushing the yen down to the upper ¥149 range. This may have prompted the government and the BOJ to intervene again at about 8:40 a.m.

After the sharp surge in the Tokyo market, the yen was being traded in the upper ¥148 range on Monday morning.

“We’re confronting speculators through the market,” Finance Minister Shunichi Suzuki told reporters at the ministry.

Suzuki did not rule out further intervention, saying, “Excessive volatility due to speculation is absolutely unacceptable, so we’ll take necessary action as needed.”

Masato Kanda, vice finance minister for international affairs, declined to say whether there was an intervention, telling reporters, “I won’t make any comment.”

From late night Friday to early morning Saturday, the government and the BOJ conducted a so-called stealth intervention, implemented without an official announcement. The yen had been near ¥152 to the dollar but temporarily appreciated to the low ¥146 level. In some trading, the yen was even in the middle of the ¥144 range.

However, many involved in the market believe that the trend of the weak yen and strong dollar will continue, as there has been no change in the basic framework causing the current situation, such as the interest-rate differential between Japan and the United States.

“Intervention has no power to turn the market trend,” said Masahiro Ichikawa, chief market strategist at Sumitomo Mitsui DS Asset Management Co. “Japan is merely buying time until U.S. interest rates slow down.”