Yen crosses 160, heightening intervention expectations

By mzaxazm


Sheets of newly-designed Japanese 10,000 yen banknotes move through a machine at the National Printing Bureau Tokyo plant in Tokyo, Japan, on Wednesday, June 19, 2024. Persistent weakness in the yen is raising concerns about the potential for a resurgence in cost-push inflation, likely weighing on private consumption.

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The Japanese yen hit a near-38 year low against the U.S. dollar late Wednesday, raising expectations that authorities could intervene in currency markets again.

The yen weakened to 160.82 against the greenback according to FactSet data, breaching the previous record of 160.03 on April 29 and reaching its weakest level since 1986.

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The last time the yen crossed the 160 level, the currency subsequently strengthened sharply during the trading session, prompting analysts to speculate about an intervention.

Japan’s Ministry of Finance later confirmed the intervention in May, saying that it had spent 9.7885 trillion yen ($62.25 billion) on currency intervention between April 26 and May 29, according to a Google-translated statement.

That was the first time that the Japanese government has undertaken such a market measure since October 2022, according to ministry records.

Yen plummets to lowest point in nearly four decades

Carol Kong, economist and currency strategist at the Commonwealth Bank of Australia, is of the view that “we may be closer to another FX intervention.”

She also said that the U.S. May personal consumption expenditures data — set to be released on Friday — might provide a catalyst for Japan to intervene if it is stronger than expected and pushes the USD/JPY pair sharply higher.

Kong noted the continued decline in the yen prompted Japan country’s top currency diplomat Masato Kanda to step up warnings.

Reuters reported that Kanda said Japanese authorities were “seriously concerned and on high alert” about the yen’s rapid decline.

“It is generally accepted that the current weakness in the yen is not necessarily justified, therefore believed to be driven by speculators,” Kanda told reporters on Wednesday. He added that authorities “have been preparing to act against excessive volatility.”

— CNBC’s Ruxandra Iordache and Sam Meredith contributed to this report.



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