Dollar to Yen Hits 150 Yen Then Plummets...Debate Over "Forex Market Intervention"

Mayor Sun "Japanese Authorities Involved"
Official "No Comment"

The value of the yen against the dollar suddenly strengthened, surging from the 150-yen range to the 147-yen range shortly after breaking through the 150-yen level on the 3rd. As the exchange rate fluctuated sharply after surpassing the 150-yen level, which is considered a psychological barrier for yen depreciation, the market speculated that Japanese foreign exchange authorities intervened in the market. However, the Japanese government did not provide any definitive response regarding this matter.

[Image source=Asia Economy]

On the 3rd, in the Tokyo foreign exchange market, the value of the yen against the dollar fell to 150.165 yen at 11 p.m., breaking the lowest point since October last year. After falling to the 149-yen range on the 26th of last month, the dollar-yen rate had been fluctuating slightly near the 150-yen mark.

It is analyzed that the selling pressure on the yen was fueled by indicators showing that the U.S. labor market remains hot. According to the Job Openings and Labor Turnover Survey (JOLTS) released by the U.S. Department of Labor that day, the number of job openings in U.S. private companies rebounded for the first time in four months last month. The excess demand in the labor market acts as a factor pressuring inflation, raising market concerns that tightening could be prolonged.

However, after this announcement, the dollar-yen rate surged sharply from just above 150 yen to 147.30 yen. As of 9:54 a.m. that day, the dollar-yen rate was recorded at 149.17 yen in the Tokyo foreign exchange market.

The possibility of intervention by the Bank of Japan (BOJ) in the foreign exchange market was raised in the market. On September 22 last year, when the yen-dollar exchange rate hit 145.898 yen, the BOJ intervened in the foreign exchange market. At that time, immediately after the authorities bought yen, the yen exchange rate fell to the low 140-yen range, so it is highly likely that the yen strengthened due to intervention by the authorities this time as well.

Edward Moya, senior analyst at OANDA Corporation in the U.S., said, "The sharp drop right after the yen-dollar exchange rate exceeded 150 yen was due to the Japanese government's currency intervention," adding, "As U.S. job openings exceeded expectations, the Japanese government likely stepped in amid forecasts that the exchange rate would rise further."

There was also analysis that the BOJ’s rate check significantly moved the exchange rate. A rate check involves asking private banks about the current exchange rate level and is interpreted as a clear signal of market intervention in the foreign exchange market. Sean Osborne, senior foreign exchange strategist at Toronto’s Scotiabank, said, "The BOJ may have directly visited foreign exchange dealers to ‘confirm prices (exchange rates)’."

On the other hand, some argue that market participants anticipated intervention by the authorities and started buying yen after the yen-dollar exchange rate broke through the psychological barrier of 150 yen. Mark Chandler, senior market strategist at New York’s BMO Global, said, "(The BOJ) may have intervened in the market, but it is doubtful," adding, "Last year, Japanese authorities intervened in the foreign exchange market three times, but never during U.S. trading hours."

Regarding the intervention in the foreign exchange market that day, a senior official from the Japanese Ministry of Finance responded to local media with "No comment." However, earlier, Japanese Finance Minister Shunichi Suzuki had lowered market expectations that yen would be bought at the 150-yen level by stating that intervention decisions would be based on exchange rate volatility rather than the exchange rate level.

This content was produced with the assistance of AI translation services.