Yen Surges Amid Speculation Japan Is Intervening in Market Again By Bloomberg

&copy Bloomberg. A dealer works next to monitors that show the yen’s rate against the US dollar in the trading area at Gaitame.Com Co., a foreign exchange brokerage, in Tokyo, Japan on Friday, October 21, 2022. The yen’s slump past the symbolic mark of 150 per dollar is keeping traders guessing when Japanese authorities will intervene to halt a further decline. Photographer: Toru Hansai/Bloomberg

(Bloomberg). — The yen rose against the dollar amid speculation that the Japanese authorities are trying to support the currency.

The currency soared as high as 2% to an intraday peak of 147.1965 per $1. Despite a torrent of warnings from officials against testing its intervention strategy, it had fallen to a new 32-year low of 151.55.

Authorities have repeatedly stated that they will respond to unilateral moves. However, some analysts warn that any intervention will only have limited impact as long the Bank of Japan keeps its policy of low interest rates while peers raise. 

The government intervened to support currency for the first times since 1998, when it had dropped to 145.90 USD. The Ministry of Finance spent almost $20 billion in September to limit the currency’s losses.

Shunichi Suzuki, Finance Minister, spoke to reporters this week and reiterated that the country will take appropriate actions against speculative moves. Bank of Japan Governor Haruhiko Kuroda has made clear he has no intention to change the rock-bottom interest-rate policy that is contributing to the yen’s slide.

The yen plunged to a 32-year high this year due to traders focusing their attention on the widening yield difference between Japan and the US. The former raised rates aggressively while the latter kept them low to stimulate a slowing economy. Investors are encouraged to seek out dollar assets that offer better returns than Japanese ones.

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