Japan's Silence on Currency Intervention Sparks Speculation as #JPY Plummets #USDJPY

The top currency official in Japan remained silent when asked if Tokyo had interfered in the currency market on Monday after a strong move that saw the #USDJPY exchange rate drop by 2%.

When reporters questioned Masato Kanda, the vice minister for foreign affairs, if government officials had intervened in markets to support the #JPY, he responded, "No comment for now."

For the first time since 1990, the value of the #JPY fell below 160 earlier in the day, compounding the country's losses of almost 10% so far this year. For a brief period, the value of the #JPY returned to 155.06 thanks to a significant rise at midday.

There is still a significant difference in #interestrates between the #US and #Japan, which puts pressure on the #JPY. Even after the Bank of Japan #BOJ hiked #interestrates in March for the first time since 2007, the #JPY has continued to decline as hopes that the #FED would lower rates have consistently receded.

The Japanese central bank's stand-pat decision from last week accelerated the currency's decline.

According to an executive economist at the Nomura Research Institute, "a currency appreciation of around 4 yen within an hour is unlikely to occur in normal trade." "An #FX intervention would just buy time; it would not have a meaningful effect."

When the #Fed meets later this week, it is widely expected to keep rates steady. Until assumptions regarding the trajectory of #US rates shift, market dynamics are unlikely to alter, which puts the yen in a precarious situation.

Market participants may continue to be skeptical of Japan's finance ministry's position on intervention as a result of the country's unwillingness to remark on the currency change. Even if the ministry has not entered any markets, that might be in its best interests.

An alternate theory is that the movements that occurred in October 2023 were primarily caused by nervous market participants and trading algorithms in thin liquidity. Senior officials in the finance ministry at the time likewise refrained from commenting on whether or not they had entered the markets.

Tokyo makes available monthly figures on currency intervention; the next release is scheduled for Tuesday at 7:00 p.m. local time.

The final few working days of each month are normally not included in the monthly announcement. Therefore, if Japan enters the market on Monday, Kanda and his associates will be able to try to keep market players in the dark for a month as the official data would not be revealed until the end of May.

#USDJPY #US #USD #JPY #DXY #G10 #markets #stockmarket #algorithms #dollar #interestrates #research #econometrics #behavioraleconomics #strategy #finances #emergingmarkets #business #currency #hedgefunds #management #euro #europe #money #investing #economy #economics #macroeconomics #GlobalFinance #EconomicShifts #GoldPrices #InflationData #InterestRates #InvestmentStrategy #FinancialMarkets #RecordHighs #FinancialMarketsUS