Forex

Dollar falls against yen, markets suspect manipulation By Stocksak


© Stocksak. Passersby are silhouetted while they walk past an electronic monitor that displays the Japanese yen exchange rate to the U.S. Dollar outside a Tokyo brokerage. Tokyo, Japan October 21, 2022 REUTERS/Issei Kano

TOKYO, Stocksak – On Friday, the battered Japanese dollar jumped against it. This triggered speculation that Japanese authorities were trying to stop a slide of their currency.

In late morning U.S. trading, the yen rose to 144.80 per $1, an increase of seven yen over its 32-year high of 151.94 yen. The dollar/yen fell 1.5% to 147.95 at the end of the day.

COMMENTS

MAZEN ISSA, SENIOR FX STRATEGIST, TD SECURITIES, NEW YORK

“It’s very clearly the Ministry of Finance stepping in to sell dollar-yen.

“It seems like, actually, just looking at the evolution of some of the portfolios … these are the sorts of assets they have on their balance sheet, you know, the securities portion of that balance sheet had been declining a lot and that is really Treasuries, so, given some of the price action in fixed income markets this week, particularly in the U.S. curve would be indicative that they are likely selling Treasuries to help fund any intervention.”

“They are trying to defend their very simple policy.

“It’s long been understood and a lot of historical evidence to suggest this is the case, that fx intervention is a temporary fix and it is not sustainable.”

“I would say today’s move has been uniquely timed in that it followed the Wall Street Journal article about any sort of calibration risks.”

“And then two. A lot people had been looking for 150 as a key level where they would see some sort of intervention. But it ran through to basically152 and then the timing and timing of their intervention occurred at a very illiquid moment, basically, as London was about heading home for the weekend. We saw the finance minister last night talk about speculators only. And so, I would say a week before the Bank of Japan meeting I think it’s indicative that they want to continue to defend that policy, but I think their timing is designed to do as much damage as possible to those trying to take top-side bets on dollar-yen.”

COLIN ASHER SENIOR ECONOMIST MIZUHO LONDON

“The price action certainly makes the appearance of intervention. It’s intervention, and it comes after the Wall Street Journal article that analyzed the rise in U.S. Treasury yields.

KARL SCHAMOTTA, CHIEF MARKET STRATEGIST, CORPAY, TORONTO

“It appears that the Ministry of Finance is intervening in this. We are seeing a lot more dollar selling, and the yen is moving almost vertically as shorts are squeezed.”

“We are hearing large blocks being traded. This usually means that larger institutions are moving money, or that a central banking is intervening in scale. The most obvious evidence is the scale of dollar selling.

 

 

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