(Bloomberg) — The yen remained under pressure and just shy of key levels against the dollar on Monday, even as Japan’s top foreign exchange official warned that authorities are ready to intervene in currency markets around the clock if necessary. necessary.
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“If there are excessive currency fluctuations, this has a negative impact on the national economy,” said Deputy Finance Minister Masato Kanda. “In case of excessive movements based on speculation, we are prepared to take appropriate measures.”
Kanda was speaking as the yen hovered around the psychological level of 160 to the dollar and the weak point of 160.17 set on April 29, when Japan is believed to have entered the market. The yen was little changed at 159.81 at 9:59 a.m. in Tokyo, leaving it near the weakest level in about 34 years.
Japan has acknowledged that it spent 9.8 trillion yen ($61.3 billion) intervening in currency markets during a one-month period between April 26 and May 29. Officials did not specify dates for the government-ordered Bank of Japan action, but they did specify trading patterns. indicate that there were two major rounds of intervention on April 29 and May 1. Data on foreign reserves indicates that Japan likely sold Treasury bonds to help finance that action.
“We suspect the next round of BOJ intervention will likely come after USD/JPY triggers buy orders above the late April high of 160.20,” wrote Tony Sycamore, market analyst at IG Australia. He said the yen’s slide against the dollar last week was driven by better-than-expected U.S. Purchasing Managers’ Index data and the BOJ’s reluctance to provide a detailed plan around its tapering of bond purchases.
The BOJ could make deeper cuts in bond purchases after checking the views of market participants, a policy board member said at this month’s meeting, according to a summary of views issued on Monday. One member said the BOJ needs to consider further tightening monetary easing as there are upside risks to inflation.
Global authorities are in contact with each other daily on a wide range of issues, including currencies, Kanda said. The market is paying attention to currency levels and there is a strong sense of caution about currency intervention, the Japanese official said.
Kanda said his counterparts in Washington have no problem with Japan’s intervention. “The most important thing for them is transparency,” he said. Kanda said the US decision to add Japan to its monetary watch list had no impact on Japan’s monetary strategy.
(Updates with charts and analyst comments)
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