Yen surpasses 160, raising intervention expectations

Newly designed Japanese 10,000 yen banknotes move through a machine at the Tokyo National Printing Bureau factory in Tokyo, Japan, on Wednesday, June 19, 2024. The persistent weakness of the Yen is raising concerns about the possibility of prices rising again. push up inflation, which can put pressure on personal consumption.

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

The yen weakened to 160.82 against the greenback according to FactSet data, violating regulations The previous record was 160.03 on April 29 and hit its lowest level since 1986.

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The last time the yen broke above 160, the currency subsequently strengthened sharply during the trading session, leading analysts to speculate about an intervention.

Japan’s Ministry of Finance later confirm intervention in May, saying it spent 9.7885 trillion yen ($62.25 billion) on currency intervention from April 26 to May 29, according to a statement translated by Google.

According to ministry records, this is the first time the Japanese government has implemented such a market measure since October 2022.

Yen plummeted to its lowest level in nearly 4 decades

Carol Kong, economist and currency strategist at the Commonwealth Bank of Australia, said “we may be getting closer to another foreign exchange intervention”.

She also said that May US personal consumption expenditure data – to be released on Friday – could provide a catalyst for Japan to intervene if the data is stronger than expected and pushes the pair USD/JPY increased strongly.

Kong noted the yen’s continued decline has fueled the move Japan’s top currency diplomat Masato Kanda stepped up the warning.

Reuters reported that Kanda said Japanese authorities were “deeply concerned and highly vigilant” about the rapid decline of the yen.

“It is generally accepted that the current weakness in the yen is not necessarily justified, so is believed to be driven by speculators,” Kanda told reporters on Wednesday. He added that authorities “are prepared to take action against excessive volatility.”

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


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