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Tokyo Traders Speculate on Possibility of Stealth Intervention in Yen - BLOOMBERG
(Bloomberg) -- Speculation intensified among yen watchers that Japan may be using subtle ways to slow the currency’s decline, zeroing in on the volatility seen after Thursday’s surprise US inflation data.
By one estimate, authorities may have spent around 1 trillion yen ($6.7 billion) to support the currency, a figure gleaned from a larger-than-expected Bank of Japan daily current account deficit.
“It is difficult to define exact factors for the balance,” said Yosuke Takahama, chief manager at money broker Central Tanshi Co., speaking about the BOJ data. “If there was an intervention on Oct. 13, one could speculate the amount to be around 1 trillion yen.”
Last Thursday, dollar-yen briefly plunged from around 147.67 to a low of 146.50 before rebounding as consumer-price inflation data overshot estimates, a move Takahama described as erratic. The pair traded at 148.76 as of 7:16 a.m. in New York.
A Ministry of Finance official declined to comment Monday on a possible second intervention saying the relevant data wouldn’t be released until February.
Top currency official Masato Kanda said last month, on the day Japan announced it stepped into markets, that stealth intervention was among the possible options for the government. The finance ministry wouldn’t necessarily confirm each intervention when it takes place, he added.
A stealth intervention typically involves the government entering the market on a smaller scale that is more difficult to detect instead of the sharp sudden large moves associated with more regular approach to intervention.
Japan spent 2.84 trillion yen in September when it stepped in to help prop up the currency for the first time since 1998.
FX Traders Eye Japan Response as Yen Approaches 150 Level
Traders remained on high alert for possible intervention to support the yen Monday after it touched a 32-year low and neared the key psychological 150 per dollar level. Finance Minister Shunichi Suzuki reiterated that the country will take bold action if there are speculative foreign exchange moves.
“The probability is high that the MOF intervened last week, judging from the BOJ’s current account balance deficit,” said Daisaku Ueno, chief currency strategist at Mitsubishi UFJ Morgan Stanley Securities in Tokyo.
(Adds yen price in fourth paragraph.)
