JPY: Finance Minister Aso Continues to Talk Up Intervention Threat - MUFG
Lee Hardman, Currency Analyst at MUFG, notes that the yen has continued
to weaken in the Asian trading session leaving USD/JPY on course to
increase for the sixth trading day out of the last seven as initial
sharp yen gains following the BoJ’s disappointing decision to leave
policy unchanged are unwinding.
“The main trigger for yen weakness overnight was again fresh comments from Japanese officials which have raised the perceived risk of direct intervention in the near-term. Finance Minister Aso spoke in front of parliament today and stated that “Japan will obviously intervene if one-sided moves persist”. He also described yen strength before and during the Golden Week holiday as having been “quite rapid” and that they are “determined to prevent such one-sided moves from accelerating”. However, he was careful not to draw international criticism stating that Japan has not and has no plans to manipulate yen moves on a long-term basis to boost export competiveness. Japan will be pleased that the stronger verbal intervention from early this week is at least initially helping to dampen yen strength.
The more broad-based bounce for the US dollar after weakness had stared to appear excessive in the near-term is also offering more support for USD/JPY. However, it remains difficult to see a sustained reversal of yen weakness in the current environment. Heightened global growth concerns and the Fed’s more cautious approach to tightening monetary policy continue to support a stronger yen which Japanese policymakers cannot control.”