Japanese Authorities Prepared to Intervene in Currency Market if Yen Falls Below 152 Per Dollar
Tatsuo Yamazaki’s Insights on Potential Currency Intervention
Former top currency diplomat Tatsuo Yamazaki stated that Japanese authorities are likely to intervene in the currency market if the yen breaks out of its long-standing range and drops below 152 per dollar. He emphasized that once the dollar surpasses 152 yen, there could be an acceleration in the pair’s rise, presenting an opportunity for intervention.
Concerns About Credibility and Speculative Moves
Yamazaki highlighted the risk to authorities’ credibility if they allow unchecked dollar/yen increases, particularly as recent yen declines have been attributed to speculative moves. This suggests that Japanese authorities are contemplating intervention to address the situation, especially in light of the potential impact on credibility.
Market Expectations and Potential Intervention
Despite the Bank of Japan’s recent decision to end negative interest rates, the yen continues to decline. Traders’ interpretation of the bank’s dovish language has fueled this trend. With the dollar nearing a 34-year high against the yen, markets are vigilant for any signs of intervention by Tokyo to stabilize the situation.
BOJ’s Policy Outlook and Speculators’ Influence
Yamazaki pointed out the lack of confidence in the Bank of Japan’s policy outlook, as reflected in Governor Kazuo Ueda’s dovish message. This has provided speculators with justification to sell the yen. Yamazaki suggested that a clearer commitment from the BOJ regarding interest rate hikes could help deter bearish sentiment toward the yen.
