Japan's new interpretation of 'excessive' yen volatility is aimed at keeping investors on guard rather than lowering the threshold for actual intervention, say experts, who expect yen bears to remain resilient until domestic monetary conditions tighten.
A man looks at an electric monitor displaying the Japanese yen exchange rate against the U.S. dollar and Nikkei share average outside a brokerage in Tokyo, Japan October 4, 2023. REUTERS/Issei Kato/File PhotoTokyo now says accumulative moves could also be deemed excessiveNew verbal tactics may work for now, but uncertainty on how long
"If currencies move too much on a single day or, say, a week, that's judged as excess volatility," Kanda told reporters. The remarks came in the wake of choppy trading on Tuesday, when the yen jumped abruptly after breaching the psychologically important 150 per dollar mark - a move some traders suspected was caused by Tokyo's yen-buying intervention.suggest there was no intervention, the price action was enough to keep yen bears at bay. The dollar/yen has stayed below 150 since Wednesday and was fetching 148.60 on Friday.
"The whole purpose of intervention is to keep markets on edge, so it's important that authorities signal they can step in any time," said Atsushi Takeuchi, a former central bank official who was involved in Tokyo's foray into the market a decade ago. There is uncertainty on how long authorities could prevent the yen from plunging again as rising U.S. Treasury yields keep upward pressure on the dollar, traders say, though Tokyo's new verbal tactics may slow down the pace of its currency's falls for now.
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