Now Reading: Yen’s August dip tests Japan’s intervention resolve
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Yen’s August dip tests Japan’s intervention resolve
The yen has weakened 0.5% against the dollar in August, eroding gains from Japan's record intervention on July 11-12 when authorities spent an estimated $87 billion. The currency briefly rallied after a…
The Story in Brief
The yen has weakened 0.5% against the dollar in August, eroding gains from Japan's record intervention on July 11-12 when authorities spent an estimated $87 billion. The currency briefly rallied after a weak US jobs report on Friday but quickly resumed its decline. Traders are on alert for further intervention as thin liquidity due to Japan's Obon holiday could amplify moves.
Bloomberg's analysis of central bank accounts suggests authorities spent around $34 billion on July 31 to support the yen, following $53 billion the previous day. The Bank of Japan's July meeting minutes flagged rising inflation risks, with one board member citing potential for accelerated rate hikes. Markets are pricing a 66% chance of a hike by September.
The Indian Opinion
The narrative that Japan's intervention is failing ignores its success in halting the yen's freefall from 164 to 155. Critics who call it futile should note that without it, the yen might be far weaker. The real test is whether Japan can hold the line if the US dollar strengthens further or if the Bank of Japan softens its hawkish tone. Watch for the August 31 summary of opinions from the July meeting for clues on future policy direction.
Source: livemint.com
This story was synthesised by AI from the source linked above.
