The yen jumped sharply against its peers yesterday after it slid past ￥160 per US dollar earlier in the session, with traders citing US dollar-selling intervention by Japanese banks.
The Japanese currency increased about 2 percent from the initial level of ￥159 per US dollar in a matter of a few minutes during Asian trading, as some traders said they had seen the selling of US dollars onshore.
The rapid move came just a few hours after the yen tumbled to the weaker side of ￥160 per US dollar for the first time in 34 years.
Photo: Kyodo via REUTERS
“It does look like intervention,” ING Groep NV currency strategist Francesco Pesole said. “The recipe, hitting that mark of 160, then it looks like a big chunk of intervention delivered at 5am (London time) ... it just makes sense at this point.”
“It’s a very busy week for markets. I suspect that they might have intervened today and then hoped that data in the US and the Federal Reserve does not turn too much favor for the [US] dollar,” he added.
The US dollar was last down 1.59 percent at ￥155.83, after falling to an intraday low of ￥154.54 in early European trading.
“I won’t comment now,” Japanese Vice Minister of Finance for International Affairs Masato Kanda, the nation’s top currency diplomat, said when asked if authorities had intervened.
The Bank of Japan (BOJ) also did not comment on such moves.
A weak yen could be a boon for Japan’s giant exporters such as Toyota Motor Corp, by boosting the value of their overseas earnings when converted into the yen. However, a weak currency could hurt the economy in the long run, because it reduces purchasing power and possible wage growth.
Japan imports almost all its energy.
In equity markets, Taiwan’s TAIEX surged 1.86 percent to 20,495.52 and South Korea’s KOSPI rose 1.2 percent to 2,687.44. Sydney’s S&P/ASX 200 increased 0.8 percent to 7,637.40, Hong Kong’s Hang Seng Index edged up 0.5 percent to 17,746.91, while the Shanghai Composite Index went up 0.8 percent to 3,113.04.
Trading was closed in Tokyo for a holiday, Showa Day. Japan has a series of holidays coming up known as the Golden Week, through Monday next week.
Meanwhile, European stocks and US futures rose, as investors looked toward the US Federal Reserve’s latest decision tomorrow and US jobs data on Friday.
The market mood was positive after last week’s Wall Street tech-driven rally, SPI Asset Management managing partner Stephen Innes said.
The recent string of strong corporate earnings has boosted market sentiment, but what could be a risk factor is the declining Japanese yen, Innes said.
“Investors will be closely monitoring the latest developments in the remarkable and volatile decline of the Japanese yen against the US dollar and other major currencies,” Innes added.
The BOJ’s decision to keep interest rates unchanged on Friday was in line with expectations, but what was unexpected was the central bank’s apparent lack of significant concern about the exchange rate, Innes said.
Additional reporting by AP
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