Yen Tumbles Past 160 to dollar, stokes intervention speculation

BySamson Ononeme

Apr 29, 2024 , ,
The yen crashed through the 160 level against the greenback, stoking intervention talks as Japan has warned about excessive volatility but taken no action.

Key Insights

  • The Japanese yen plunged past 160 against the U.S. dollar on Monday, hitting a fresh 33-year low.
  • The yen’s sharp decline has stoked speculation about potential intervention by Japanese authorities to prop up the currency.
  • Despite warnings about excessive yen volatility, Japan has made no official announcements on intervening, even as the yen blew past the 155 level last week.

TOKYO (MarketsXplora) – The Japanese yen plunged past the 160 level against the U.S. dollar on Monday, hitting a fresh 33-year low and stoking speculation about whether authorities may step into markets to arrest the currency’s sharp decline.

The yen briefly touched 160.03 per dollar in early Asian trade, the weakest since April 1990 when it hit 160.15, according to TradingView data. It later pared some losses to trade around 155.7 per dollar by midday.

With the yen plunging past 160 to the dollar, analysts are watching for signs Japan may step into markets to arrest the currency's sharp decline.
The yen crashed through the 160 level against the greenback. Source: TradingView

The latest plunge comes amid sustained strength in the greenback, as expectations for Federal Reserve rate cuts get pushed back following hotter-than-expected U.S. inflation data on Friday. This has widened the monetary policy divergence with the Bank of Japan.

Japanese authorities have repeatedly warned about excessive yen volatility but made no official announcements on intervening to prop up the currency, even as it blew past the 155 level last week that some market watchers saw as a line in the sand.

The Commonwealth Bank of Australia said Japan’s Ministry of Finance is due to publish intervention data for late March to late April on Tuesday, though it added there were no media reports confirming action yet.

“Today’s yen volatility may reflect the skittishness of markets amid thin liquidity. We will unlikely receive comments from Japanese officials today because Japan is on holiday,” the bank said.

Any yen buying by Japanese officials would go against speculative positioning built up for further yen weakness, some analysts said.

“Intervention will be a waste of Japan’s national assets as the country sells its U.S. dollars to buy yen,” said Jesper Koll, expert director at Monex Group.

“For speculators, intervention is free liquidity and will remain as such unless the Fed signals rate cuts or the BOJ flags plans to contain inflation.”

The yen has wallowed around 150 or weaker since March when the BOJ scrapped its negative interest rate policy. On Friday, the central bank left rates steady but raised its fiscal 2024 inflation forecast slightly.

BOJ Governor Kazuo Ueda has said volatility would only affect monetary policy if it has a “significant” economic impact.

But Vincent Chung, portfolio manager at T. Rowe Price, said yen weakness has been positive for Japanese stocks, helped drive wage hikes and brought inflation closer to the BOJ’s 2% target.

“The current pace of depreciation is less than in 2022 so the intervention response could be less intense,” Chung added.

Samson Ononeme

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