Japanese Authorities Unlikely to Intervene in Currency Market Unless Yen Plunges Below 155 to Dollar
Expert Insights on Currency Market Trends
Former top currency diplomat Hiroshi Watanabe believes Japanese authorities will not intervene in the currency market unless the yen drops below 155 to the dollar. The possibility of intervention is slim at the moment, as the yen’s recent declines have been moderate compared to previous years.
Market Alert for Potential Intervention
While markets are closely watching the yen’s movement towards the 152 level, where intervention occurred in 2022, Watanabe suggests that a break above 155 to the dollar would be a key trigger for authorities to step in. Media attention and public scrutiny could amplify the chance of intervention if the yen’s depreciation is significant.
Factors Influencing Yen’s Performance
Watanabe predicts that the dollar/yen exchange rate will likely fluctuate within a range of 145-155 in the near future, driven partly by the interest-rate disparity between the US and Japan. Despite the Bank of Japan’s recent policy changes, the yen continues to weaken due to expectations of delayed rate hikes.
Implications of BOJ’s Monetary Policy
With the BOJ maintaining a dovish stance and holding off on aggressive rate hikes, Japanese borrowing costs will remain low, exerting downward pressure on the yen. Additionally, the lack of repatriation of overseas profits by Japanese firms could prevent a significant yen rebound even amid economic improvements.
Market Dynamics and Yen’s Outlook
Despite potential economic growth in Japan, Watanabe asserts that a strong yen is not guaranteed. The yen’s performance is likely to be influenced by various factors, including global market conditions, monetary policy decisions, and corporate behavior.
