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Unexpectedly high inflation in the United States strengthened the dollar, and the yen was once near 160, causing Japanese officials to once again warn that the exchange rate was depreciating too quickly. Therefore, the market was hopeful that Japan might intervene again.
Americainflation Market bets exceed expectationsfederal Reserve The US dollar has strengthened due to the possibility of further interest rate hikes. The yen fell 0.8% to 159.94 against the US dollar, once close to 160 yen. Japanese authorities are once again facing pressure to enter the market to protect the market.
Japanese financial official Jun Mimura said on Thursday that recentlyexchange rate The move was “very sharp” and reminded the market that it was too early to forget about this summer’s intervention. The yen later rose 0.1% to 159.63.
Although the Bank of Japan has not ruled out continuing to raise interest rates, if the Federal Reserve tightens again, the interest rate differential between the United States and Japan may widen again, leading to depreciation pressure on the yen.
Commonwealth Bank of Australia strategist Carol Kong said the yen was still largely influenced by the Fed’s policy expectations. Even if the Bank of Japan accelerates the pace of interest rate hikes, it will still be difficult to overpower the Fed in terms of aggression.
“If the exchange rate falls below 160 soon, it will set off alarm bells in Tokyo. We will certainly see Japanese authorities increasing their warnings against a weaker yen,” he said.
Japanese officials stressed that whether to intervene depends on the speed of exchange rate changes and whether the market is disorganized, rather than on any specific price. However, market participants still view the 160 as a potential line of defense, having triggered intervention after a failure earlier this year. Japan has taken measures to protect the market three times this summer, at a total cost of 15.4 trillion yen.
Summary FAQ
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Due to higher than expected inflation mainly in the United States, the market is betting that the Federal Reserve may raise interest rates further, which will strengthen the dollar. As a result, the yen fell once to 159.94, just a step away from the 160 level.
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Financial official Jun Mimura said the recent exchange rate fluctuations were “too sharp” and reminded the market not to prematurely forget the intervention measures this summer, indicating that the authorities are highly alert to the sharp depreciation of the yen and may take action again if necessary.
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Although Japanese authorities said whether to intervene depends on the speed of change and whether the market is disorganized, the market still regards 160 as an important line of defense, as it started intervening after it fell below 160 earlier this year, and it has protected the market three times this summer, costing 15.4 trillion yen.
