Yen strengthens slightly after authorities’ threat
Japan's three main monetary authorities held an emergency meeting on Wednesday to discuss the yen's weakness and suggested they were ready to intervene in the market to halt what they described as disorderly and speculative movements in the currency.
This caused a slight rebound in the Yen , after the Japanese currency had reached its lows against the dollar yesterday.
Here is the Yen Dollar exchange rate from a longer perspective, which shows the particularities of the current exchange rate.
In a sign of growing urgency to put a floor under the yen after the currency fell to a 34-year low against the dollar, the Bank of Japan, the Ministry of Finance and the Japan Financial Services Agency held a late meeting in Tokyo trading hours.
In a subsequent briefing, top foreign exchange policymaker Masato Kanda said he "will not rule out any measures to respond to disorderly movements in the exchange rate." Kanda also said the BOJ will respond through monetary policy if currency movements affect the economy and price trends. The danger is that excessive devaluation could lead to imported inflation due to an increase in the prices of energy and imported goods.
The dollar slipped against the yen on news of the meeting and settled at 151.06 after Kanda's speech. Previously, the yen was at 151.97, weaker than the 151.94 level at which Japanese authorities intervened in October 2022 to buy the currency
The yen continued to lose ground despite the BOJ's historic move away from negative interest rates last week. Indeed we could say that the market interpreted this change precisely as a weakness of the Central Bank which felt obliged to respond to the market, while until recently it acted in its monetary policy without taking it into account.
Bank of Japan Governor Kazuo Ueda said Wednesday the central bank would also keep a close eye on currency developments. “Currency movements are among the factors that have a large impact on the economy and prices,” Ueda told Parliament, when asked about the yen's recent sharp decline.
Forex strategists at National Australia Bank said the repercussions of the yen's decline were being felt elsewhere and said the recent sharp decline in the Chinese yuan could be a policy response to protect export competitiveness. The risk is that a competitive devaluation begins which then crowds out the other currencies, pushing for a round of devaluation against the dollar.
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This is a machine translation of a post published on Scenari Economici at the URL https://scenarieconomici.it/lo-yen-si-rafforza-leggermendte-dopo-che-le-autorita-minacciano/ on Wed, 27 Mar 2024 17:58:19 +0000.