Japan’s top currency official warned that the government would take action if needed in comments that follow a weakening of the yen to its lowest levels since November last year.
“It’s important that currency markets reflect fundamentals and move in a stable manner. Excessive moves aren’t desirable,” Japanese Vice Finance Minister for International Affairs Masato Kanda told reporters after the first meeting of the Japanese Ministry of Finance, the Bank of Japan (BOJ) and the Financial Services Agency since March. “The government will continue to closely monitor market moves, and will take appropriate responses if necessary.”
The unscheduled meeting came after the yen softened beyond ￥140 per US dollar. Japan intervened in September and October last year to prop up the currency, after a slump that at one point took it past the 150 level.
Photo: Reuters
The meeting took place shortly after 5:30pm local time, and no statements were released.
“On our verbal intervention scale, this is just a two out of seven, with seven being warning of imminent intervention,” said David Forrester, Singapore-based strategist at Credit Agricole, ahead of the meeting. “So today’s meeting is likely to make sure mechanisms are still in place to intervene if needed.”
Markets are nowhere near the level of volatility used to justify intervention last year, he added.
The Japanese currency rallied about 0.5 percent from its intraday low of ￥140.93 per US dollar as news of the meeting broke. It traded at about ￥140.40 per US dollar as of 6:20pm in Tokyo following the meeting.
Representatives from the three key institutions last met on March 17 in response to jitters in the global banking sector following the failure of Silicon Valley Bank.
Some analysts have said the yen is close to hitting a bottom against the US dollar, with an improving trade account and higher tourism arrivals offering support, and is unlikely to weaken to levels requiring intervention. The Japanese currency has declined more than 6 percent this year.
“At this point, the government is unlikely to intervene, as stocks have maintained a strong bias amid the weaker yen,” Monex Inc bond and currency trader Tsutomu Soma said. “Investors may become more nervous should the yen fall to around 145.”
Kenneth Broux, head of corporate research for FX and rates at Societe Generale SA, said that FX intervention at current levels was unlikely.
“I think the barrier is higher for active dollar sales,” he said. “This is the start, trying to slow the speed” of yen weakness.
Jane Foley, head of FX strategy at Rabobank NV, also said the meeting was unlikely to bring about a change in policy, “but it may bring a change in temperature with regard to policy.”
She said the central bank’s July meeting was one to watch for the outlook for developments concerning the BOJ’s yield curve control policy.
Hong Kong authorities ramped up sales of the local dollar as the greenback’s slide threatened the foreign-exchange peg. The Hong Kong Monetary Authority (HKMA) sold a record HK$60.5 billion (US$7.8 billion) of the city’s currency, according to an alert sent on its Bloomberg page yesterday in Asia, after it tested the upper end of its trading band. That added to the HK$56.1 billion of sales versus the greenback since Friday. The rapid intervention signals efforts from the city’s authorities to limit the local currency’s moves within its HK$7.75 to HK$7.85 per US dollar trading band. Heavy sales of the local dollar by
Taiwan Semiconductor Manufacturing Co’s (TSMC, 台積電) revenue jumped 48 percent last month, underscoring how electronics firms scrambled to acquire essential components before global tariffs took effect. The main chipmaker for Apple Inc and Nvidia Corp reported monthly sales of NT$349.6 billion (US$11.6 billion). That compares with the average analysts’ estimate for a 38 percent rise in second-quarter revenue. US President Donald Trump’s trade war is prompting economists to retool GDP forecasts worldwide, casting doubt over the outlook for everything from iPhone demand to computing and datacenter construction. However, TSMC — a barometer for global tech spending given its central role in the
The Financial Supervisory Commission (FSC) yesterday met with some of the nation’s largest insurance companies as a skyrocketing New Taiwan dollar piles pressure on their hundreds of billions of dollars in US bond investments. The commission has asked some life insurance firms, among the biggest Asian holders of US debt, to discuss how the rapidly strengthening NT dollar has impacted their operations, people familiar with the matter said. The meeting took place as the NT dollar jumped as much as 5 percent yesterday, its biggest intraday gain in more than three decades. The local currency surged as exporters rushed to
PRESSURE EXPECTED: The appreciation of the NT dollar reflected expectations that Washington would press Taiwan to boost its currency against the US dollar, dealers said Taiwan’s export-oriented semiconductor and auto part manufacturers are expecting their margins to be affected by large foreign exchange losses as the New Taiwan dollar continued to appreciate sharply against the US dollar yesterday. Among major semiconductor manufacturers, ASE Technology Holding Co (日月光), the world’s largest integrated circuit (IC) packaging and testing services provider, said that whenever the NT dollar rises NT$1 against the greenback, its gross margin is cut by about 1.5 percent. The NT dollar traded as strong as NT$29.59 per US dollar before trimming gains to close NT$0.919, or 2.96 percent, higher at NT$30.145 yesterday in Taipei trading
RSS