Japan shifts to ambush intervention tactics against yen short sellers: Reuters
Officials are avoiding clear warning signs and may act abruptly to squeeze speculative short-yen positions, after Japan spent a record 11.73 trillion yen on intervention.
- On Thursday, Japanese officials shifted toward targeted intervention tactics against yen short sellers, abandoning telegraphed warnings. The Ministry of Finance could step in abruptly to wipe out speculative positions, sources said.
- Japan spent a record 11.7 trillion yen intervening in foreign exchange markets between late April and early May, but the brief boost evaporated quickly. Authorities adopted silence to prevent traders from preemptively unwinding yen short positions.
- Top currency diplomat Atsushi Mimura is avoiding any specific "line in the sand" exchange-rate level to keep traders guessing. SMBC Nikko Securities strategist Rinto Maruyama said this silence makes it "harder for markets to gauge the next intervention timing."
- The BOJ policy rate remains at 1 per cent, trailing the Federal Reserve's 3.50 per cent-3.75 per cent range, preserving a wide interest-rate gap. Nomura Securities strategist Mari Iwashita said "The BOJ's cooperation is necessary to stop the yen's falls."
- Despite the yen slumping to four-decade lows, BOJ officials are expected to reinforce their commitment to further rate increases if economic conditions warrant. Wednesday's quarterly "tankan" survey showed business sentiment at its highest level in eight years, supporting additional hawkish moves.
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Japan Could Still Intervene in Forex Market Despite Yen Pullback, Weaker Dollar
Get latest articles and stories on Business at LatestLY. The Japanese Finance Minister Satsuki Katayama, in a press conference, reiterated the government's stance that it is ready to act at an appropriate moment to stabilise the currency. Business News | Japan Could Still Intervene in Forex Market Despite Yen Pullback, Weaker Dollar.
Japanese authorities are abandoning the habit of telegraphing the risks of intervention, signaling instead a more targeted campaign to pressure speculators and raise the cost of betting against the yen, two sources familiar with the matter said. Exclusive content for subscribers. For full access, follow the link to the article and register.
Japan shifts to ambush intervention tactics against yen short sellers, sources say
Japan's finance ministry is shifting tactics, abandoning public warnings about currency intervention. Officials now aim to surprise speculators by intervening abruptly to support the weakening yen, a move designed to increase the cost of betting against the currency. This strategy, coupled with the Bank of Japan's hawkish stance, signals a coordinated effort to curb excessive yen depreciation and manage inflation.
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