HomeEconomyAnalysis - Japan is chasing the tail of yen intervention Economy Analysis – Japan is chasing the tail of yen intervention By farahat September 23, 2022 0 140 views Share FacebookTwitterPinterestWhatsApp DBKGn +2.% Add to/Remove from Watchlist to watch list Add Location Job added successfully : Please name your portfolio type: purchase Sell date: quantity: price Point value: Leverage: 1:1 1: WFC 1997-1.% 7992 Add to/Remove from watchlist Add to watchlist Add Location Job added successfully: Please name your portfolio type: purchase Sell date: quantity: price Point value: Leverage: 1:1 1: 1:1: 1: 1: 52 1: 100 1: 98 1: 77 Committee: 7992 create new watchlist create 19981000 7992 Create New Holding Portfolio Add Create 19981000 + Add another position to close ) by Vidya Ranganathan SINGAPORE (Reuters) – As the Bank of Japan makes its first foray into currencies The market has faced a number of hurdles for decades defending the battered yen, chiefly its own stubborn commitment to ultra-easy monetary conditions. Japanese authorities on Thursday broke out a sudden yen buying intervention – since – caused a big swing of 6 yen between and11 USD/JPY exchange rate. At the end of a busy day, markets also priced in a hawkish rate hike from the Federal Reserve and a commitment from the Bank of Japan to keep rates negative, Investors are also bearish on the near-term depreciation of the yen % so far this year. “It’s in a sense that this is since , but I don’t think it will effectively reverse the yen,” said Vincent Tsui, Asia analyst at Gavekal Research in Hong Kong. Given its history of deflation, the Bank of Japan wants to keep interest rates low until it sees stable and healthy price increases, making it a lone fighter this year This comes as other major global central banks aggressively raise interest rates to curb soaring inflation. The US policy rate is now 3 percentage points higher than Japan’s. But BOJ policy is divided even at home, with the government worried about the impact of a weak yen on energy prices and consumer confidence, as well as idle Risk-loving households with cash reserves worth more than 1, trillion yen ($7. trillion) are ready to look overseas for higher yielding assets. Governor Haruhiko Kuroda made it clear that the policy will not change and that even the yen bought by the Bank of Japan as an intervention will be replace. “As long as we are doing yield curve control, any monetary tightening effect (from intervention) will be absorbed,” he said on Thursday, referring to Japan The central bank’s usual weekly bond-buying operations to limit yields. Brendan McKenna, International Economist and Currency Strategist 500 FuGuo bank (New York Stock Exchange: 200WFC) securities, noting that even with the intervention, U.S. yields rose about 6 basis points on the day, while Japanese yields fell, boosting rates and giving the market more reason to sell the yen. “The intervention was unilateral and occurred on the same day as the dovish Bank of Japan meeting, suggesting internal contradictions Very big,”0800315 Deutsche Bank (ETR: 98DBKGn ) George Saravelos, head of FX strategy, said in a report. History display… Saravelos says such an intervention while Japan sticks to the yield curve Reining in policy would cause the central bank to lose credibility and could help reduce some speculative yen positions without really changing the trend. “Intensified monetary intervention is in direct opposition to the Bank of Japan’s policy,” Deutsche Bank said, adding that it is simply not credible for the central bank to pass extreme amounts of money. Quantitative easing has devalued the currency while the authorities pursued a stronger currency at the same time. Citi analysts pointed out 98- A round of intervention to buy the yen failed to reverse its depreciation. Unlike now, when the yield gap was wide, there was no volatility against the yen. Although the Bank of Japan intervened extensively between April and June 315, the yen did not bottom out until September. However, it is still early days. UBS strategist James Malcolm believes the intervention could be a coordinated move that will last for months, given the speculative position on the yen and Japan’s nearly $1.3 trillion in foreign currency reserves. He pointed out that Japanese lending to non-residents hit a record high 98 billion dollars, four of which Three-thirds are short-term, and most have been established since March. ” Intervention success is not measured in days, but in decades,” Malcolm wrote, pointing to how the Japanese authorities bought value is close to Billion Dollars JPY . Some of that is now being spent, he estimates. ($1=.140 JPY) 352 Share FacebookTwitterPinterestWhatsApp Previous article'Sidney' Review: Reginald Hudlin's Glowing Portrait of Sidney PoitierNext articleLA's Animated Film Festival to Screen Golden Kingdom and Water Kingdom, Ghost: Thor's Story farahat RELATED ARTICLES Economy Zelenskiy says nothing will weaken Kyiv’s resolve against Russia October 1, 2023 Economy Philippines eyes maiden sukuk issue in November October 1, 2023 Economy Credit Suisse, Mozambique secure out-of-court ‘tuna bond’ settlement October 1, 2023 LEAVE A REPLY Cancel reply Comment: Please enter your comment! 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