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The Japanese yen closed at just under 148.70 last Friday, capping nine straight weeks of losses. PHOTO: REUTERS
TOKYO - Currency traders braced themselves for possible intervention to support the yen on Monday after it touched a 32-year low and neared the key psychological 150 per US dollar level.
The Japanese currency closed at just under 148.70 last Friday, capping nine straight weeks of losses. Finance Minister Shunichi Suzuki said last Friday that Japan is "deeply concerned" about rapidly increasing volatility in the market, and chief currency official Masato Kanda said the authorities were prepared to take "bold action".
The strong words were just the latest in a series of warnings over speculative currency moves following the yen's slump to a three-decade low, as the authorities tried to dissuade traders from testing its intervention strategy. A rapid slide in the yen to 145.90 per US dollar in September triggered the nation's first intervention to support the currency in 24 years.
Strategists have said Japanese officials won't necessarily have a line in the sand at which they'll act again and are likely focusing on the speed of declines. But some have also said 150 is a key psychological level for Japanese citizens and a breach would likely heap pressure on the government domestically to act again.
"Markets might thus further raise the bar towards 150, which many investors suspect is the maximum fall of the yen Japanese authorities might tolerate at present," wrote UniCredit FX strategist Roberto Mialich in a note last Friday. With expected volatility high, "market nervousness is thus set to continue".
The yen has tumbled about 23 per cent against the US dollar in 2022 due to a widening monetary policy differential between the United States and Japan. It erased September's intervention-driven gains despite the ministry's 2.84 trillion yen (S$27.3 billion) spend. BLOOMBERG
Source: The Straits Times
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