Yen strengthens to one-month high against dollar
The Japanese yen strengthened by more than 1% against the U.S. dollar on Thursday and briefly reached 156.34 yen per dollar — its highest level in a month. As of 4:20 a.m. U.S. Eastern Time, the currency was trading at 157.1 yen per dollar and had also gained against the euro and the British pound, CNBC reports.
Probability of new intervention
The yen’s move renewed market speculation about possible new currency intervention by Japanese authorities. Earlier this week, the exchange rate exceeded 160 yen per dollar — a level that market participants often view as a threshold after which the likelihood of intervention increases.
According to Japan’s Ministry of Finance, from July 30 to August 26, the country spent a record 15.4 trillion yen, or about $98 billion, to strengthen the national currency. The United States also confirmed participation in coordinated actions at the end of July, using its foreign currency reserves to buy yen. Washington did not disclose the exact volume of the operations.
Japan’s Vice Minister of Finance for International Affairs Atsushi Mimura said authorities were “neither satisfied nor reassured” by the latest fluctuations and remained on heightened alert, CNBC reports, citing Reuters.
More current news is available on the UA.News Telegram channel Telegram.
Expectations of a Bank of Japan decision
Some analysts link the yen’s strengthening primarily to rising expectations of a Bank of Japan rate hike in September. The central bank is due to make its next monetary policy decision on September 18.
Bank of Japan board member Hajime Takata said the previous day that the regulator should raise rates promptly in response to rising inflation. Takujii Okubo, chief economist at Japan Macro Advisors, suggested that the yen’s movement on Thursday could have been the result of intervention, but said a market reaction to comments by Bank of Japan Governor Kazuo Ueda, which reinforced expectations of a rate hike, was more likely.
Chris Turner, head of global markets at ING, said the absence of disruptions in electronic currency trading systems casts doubt on the intervention theory for Wednesday. At the same time, he noted that expectations of a U.S. Federal Reserve rate hike this month could support the dollar against the yen.
