Japan Warns About Intervention

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Japan Warns About Intervention

Japan Warns About Intervention On Jpy Decline

A top Japanese official has commented on how they stand ready to take all steps required to prevent any excessive volatility in the currency market. They added that any big moves in the exchange rate of the Japanese Yen are undesirable and the officials will take steps to stop it from happening.

Hayashi added that the currency rate of Japanese Yen against other currencies should reflect the fundamentals. In other words, any moves that are not based on the fundamentals will be dealt with!

No Comments On Recent Intervention

This was more of a warning for the currency traders as the Japanese officials wanted to control the exchange rate of the Japanese Yen. As for whether the officials have intervened in the market during the last few days, Hayashi didn't comment at all.

lot of traders suspect that Japan has intervened in the currency market to support the Japanese Yen which was sitting at 38-year lows. The first instance was on Thursday when the US CPI report was released, and the second one was on Friday.

Data from the Bank of Japan (BoJ) shows that they have spent around $22.51 billion or around 3.57 trillion to shore up the JPY. Later today, we will also get money market data, which will provide better insight into whether Tokyo has intervened in the market.

As Tuesday's session unfolds, the exchange rate of USD/JPY is 158.62 and is very close to 160.00, which is the supposed level for currency intervention. In simple words, if the USD/JPY rises to 160.00, we may get another intervention from the BoJ.

It is also important to note that these FX interventions are very costly operations, even for a wealthy central bank like the BoJ. Unofficial data shows that around $22.51 billion was spent to support the JPY which is a really big amount no matter how we look at it.

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