Tokyo Chief Cabinet Secretary Yoshimasa Hayashi stated on Tuesday ( 16 July ) that Japan is prepared to take all necessary measures to stop currency movements that are excessively volatile, keeping markets on alert for the possibility of additional government intervention to support the yen.
” It is crucial for currency prices to move permanently, keeping in mind the basics. Increased uncertainty is undesirable”, Hayashi told a regular media event.
” We will carefully watch exchange-rate innovations and have ready to take all possible methods”, he said.
When questioned about Tokyo’s intervention in the forex market last week to support the renminbi for two straight days, Hayashi declined to comment.
Traders believe Tokyo stepped in to change the industry to raise a currency that has been languishing at 38-year lows again on Thursday after a cooler-than-expected US prices report caused a rise in the renminbi, and once more on Friday.
Bank of Japan data suggested Japan may have spent up to ¥3.57 trillion ( US$ 22.51 billion ) intervening on Thursday last week. Later on Tuesday, investors may be watching the transfer of funds market data to find out if Tokyo intervened next Friday as well.
The japanese jumped 3 per share against the money to 157.40 after Thursday’s suspected action.
But it lost most of its floor and stood at 158.62 on Tuesday, not far off the 160 level seen as Chinese officials ‘ line-in-the-sand for money treatment.
Analysts see similarities between the alleged action next week and the one on May 1, when Jerome Powell made dovish comments.
Tokyo probable intervened in both instances when the money was already struggling against the yen, according to Masafumi Yamamoto, Mizuho Securities ‘ chief dollar strategist.
” This time, intervention came when the dollar/yen was n’t necessarily rising sharply”, he said. ” This suggests authorities were worried more about the level of the yen, at below 160 ( to the dollar ), rather the speed of its falls”.
Producers are helped by a weak yen, but Chinese policymakers are concerned about how it affects use because it raises the price of food and fuel imports.
Chinese authorities have recently made it a common exercise to not state whether they have intervened in or not the money market.