Investing.com - Financial Markets Worldwide
Get 40% Off
Get 40% Off
🚨 Volatile Markets? Find Hidden Gems for Serious Outperformance
Find Stocks Now

Yen Hopes for FX Intervention

ByFxPro Financial Services Ltd
AuthorAlexander Kuptsikevich
Published 06/27/2023, 10:03 AM
Updated 03/21/2024, 07:45 AM

The Yen has been under pressure, losing 3.5% against the Dollar and over 5.6% against the Euro since the beginning of the month. The EURJPY has risen to its highest level since September 2008. The USDJPY is trading above 143.50, where the intervention took it in October and November last year, and close to the 1998 turning point.

The Yen has been under pressure

The yen's sharp weakness and proximity to historical highs have traders pricing in the likelihood that the central bank will intervene at the behest of the Ministry of Finance to strengthen the exchange rate. However, the nominal exchange rate means little to the government and the central bank, so the focus is on economic indicators.

The most important of these is the Bank of Japan's core CPI. Here we see an acceleration to 3.1% y/y from 3.0% the previous month and a low of 2.7% in February. Although the rate of price increases in Japan is significantly lower than in the US and Europe, there are no signs of a peak.

BoJ Core-CPI renewed its growth

For the economy, inflation expectations are becoming more firmly anchored. On the one hand, higher inflation is in line with central bank targets of previous decades. Hence the relative apathy of the BoJ, which has yet to take the slightest step to tighten policy in the fight against rising prices.

There is a belief that exchange rate depreciation improves export competitiveness. However, this rule only really applies when it is certain that the exchange rate will stay the same. 

Therefore, the case for intervention to support the yen is growing, but it isn’t easy to foresee when it will occur. It could be the current USDJPY level of 143, where the pair has been stuck for a third day, or the 150 area, where the USD climbed in October 2022. 

The FxPro Analyst Team

3rd party Ad. Not an offer or recommendation by Investing.com. See disclosure here or remove ads .

Latest comments

Install Our App
Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.