Wednesday, September 27, 2023
HomeEconomyJapan won't intervene to defend 145 yen bottom line: ex-top FX diplomat

Japan won't intervene to defend 145 yen bottom line: ex-top FX diplomat

by Leika Kihara

TOKYO (Reuters) – Japan may not intervene in currency markets to defend bottom lines like against the dollar, instead limiting any further moves to quell operations aimed at dampening volatility, said Naoyuki Shinohara, a former senior currency diplomat.

After the dollar surged close to 146 the yen, Japan intervened in the currency market on Thursday to buy the yen for 1998 for the first time since. Finance Minister Shunichi Suzuki said he is ready to step in again if the yen fluctuates too much.

Shinohara, who was in charge of Tokyo’s monetary policy during the 2008 Lehman crisis, said any further yen-buying intervention given Japan’s need to avoid criticism from G7 developed nations size will be limited.

“Japan is unlikely to continue to intervene to defend a certain line, such as 145 JPY/USD,” keeping close to current policy makers Contact Shinohara said.

“It is impossible to reverse the general trend of the market through intervention alone,” he told Reuters in an interview on Saturday. “The most the authorities can do is reassure the market when currency moves become very volatile.”

The dollar soon fell to close to 140 Yen rebounded above Yen by Friday after Thursday’s intervention. It was trading at in early Asian trade on Monday. 320 JPY.

UNITED He said countries may not have criticized Japan’s actions on Thursday as Tokyo described it as dealing with “excessive volatility”, which the G7 agreed could hurt growth.

But if Tokyo repeatedly takes steps, Washington may object to entering the market, or give the impression that it is preventing the yen from falling to below a certain level.

JPY/USD has been hovering at near yearly lows and the Bank of Japan’s (BOJ) pledge to keep interest rates ultra-low.

Tokyo intervened shortly after the Bank of Japan’s decision to keep interest rates ultra-low and the yen’s plunge due to Governor Haruhiko Kuroda’s post – meeting opinion that interest rates may not rise for years to come.

As long as the Bank of Japan maintains ultra-low interest rates, the yen’s downward trend will be difficult to reverse, Shinohara said.

“Kuroda seems more determined than ever to maintain ultra-easy policy, which amounts to announcing that the Bank of Japan will continue to inject yen into the market,” Shinohara said.

The dovish stance of the Bank of Japan and he said the goal of government intervention in the yen is to support the yen by removing it from the market.

Accelerator and brake simultaneously. When you do this with your car, you either damage the brakes or lose control of the steering wheel,” Shinohara said.

“I don’t think Japan can continue doing this for too long. ”



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