As the world’s best investment manager and financial market’s journalist, I bring you the latest update on Japanese authorities spending 5.53 trillion yen to intervene in the foreign exchange market. This move was aimed at pulling the yen off 38-year lows, as confirmed by official data on Wednesday.
The sharp yen spikes over July 11 and 12 raised suspicions among traders and analysts, with money market estimates suggesting intervention worth 5.71 trillion yen. The yen shot from as low as 161.76 per dollar to as high as 157.30 over the two days from July 11.
While the Ministry of Finance’s data only covers the period from June 27 to July 29, a day-by-day breakdown will be available in quarterly data in about three months’ time. The latest intervention differed from previous rounds as officials bought yen while the dollar was already tumbling due to weak U.S. consumer inflation data.
Factors such as Donald Trump’s comments on a weaker currency and Japanese politicians urging interest rate hikes also contributed to the yen’s strength. Despite rising expectations for further Bank of Japan policy normalization, analysts expect the yen to weaken again in August.
Japanese authorities have refrained from confirming intervention but remain ready to act against speculative currency moves. With plenty of firepower and weak yen being unpopular with the public, further intervention could be on the cards, especially with ruling party leadership elections in September.
Analysts believe that intervention under new leadership and the continuation of carry trades could impact the yen’s future movements. Stay tuned for more updates on this developing story!
($1 = 150.4200 yen)