On the 30th, the yen exchange rate in the Tokyo foreign exchange market fell to the low 156 yen level to the dollar. After the yen appreciated significantly from the 160 yen level for the first time in 34 years on the 29th, which was a national holiday in Japan, domestic companies and others began to buy dollars and sell yen due to the perceived affordability of the dollar. High stock prices were also a factor in selling the yen due to increased risk tolerance, causing the yen to drop to just around 157 yen at one point.
- As of 3:27 p.m., the yen was 156.77 yen, down 0.3% from the previous day. Highs at 156.07 yen, then drops to 156.99 yen at one point
Fukuhiro Ezawa, head of Financial Markets at Standard Chartered Bank, pointed to the affordability of the dollar as a factor behind the yen’s decline, and said, “On the 5th and 10th of the month, supply and demand shifted toward dollar buying. “This is also affected by yen selling due to rising stock prices.” He also raised his expectations for the dollar’s strength ahead of important U.S. events such as this week’s Federal Open Market Committee (FOMC) meeting and employment data.
On the 29th, the yen exchange rate temporarily fell to 160 yen17 due to the contrast between the Bank of Japan’s dovish monetary policy stance and the decline in expectations for a rate cut by the US Federal Reserve (Fed), with domestic investors absent due to the holiday. The price has approached the lowest price reached on April 17, 1990 (160.20 yen). After that, the currency rose sharply by more than 5 yen to 154.54 yen, and there was widespread speculation in the market that the currency authorities would intervene to buy the yen.
On the morning of the 30th, Finance Minister Masato Kanda declined to comment on whether there was any intervention, but said, “If excessive fluctuations occur due to speculation, it will have a negative impact on people’s lives.” He said he would be available 24 hours a day. The impact on the yen exchange rate was limited.
Finance Minister Kanda: Responding 24 hours a day, no comment on whether there will be any intervention.
Yoshio Iguchi, head of markets at Traders Securities, points out, “The market is tilted towards a strong dollar and weak yen, and the key question is how the Japanese authorities will act in this situation.” Assuming that there was an intervention, he said, “Now that we have done this, I think it will firmly support the yen. Yesterday, it supported the yen at 157 yen, so it would not be strange to see an intervention at around the mid-157 yen level.” I don’t think we can let our guard down.
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