(Bloomberg) — The sudden rebound in the yen sparked speculation Japanese officials had intervened after the currency earlier slid past the closely-watched 160-per-dollar level.
The yen rallied to as strong as 155.06 per dollar in Asian trading after earlier sliding to 160.17, the weakest level since 1990. The sudden turnaround took place amid thin liquidity due to a local public holiday in Japan. Japan’s top currency official Masato Kanda said he had “no comment for now,” when asked by reporters whether or not the authorities intervened.
Here’s what analysts and strategists had to say:
Tony Sycamore, market analyst at IG Australia in Melbourne:
“The move has all the hallmarks of an actual Bank of Japan intervention, and what better time to do it” than a Japanese public holiday “which means lower liquidity in USD/JPY, and more bang for the BOJ’s buck.”
Takahide Kiuchi, executive economist at the Nomura Research Institute:
“A yen appreciation of about 4 yen within an hour is unlikely to occur in normal trading.”
Crossing the 160 yen per dollar milestone may have served as a factor for persuading the US authorities, who have been reluctant to condone intervention in the Japanese currency market. The thin liquidity makes it possible for even a relatively small intervention to move the currency markets significantly.
Hirofumi Suzuki, chief currency strategist at Sumitomo Mitsui Banking Corp. in Tokyo:
The yen’s decline beyond 160 per dollar seems to satisfy conditions for intervention. Whether the Ministry of Finance actually entered the market remains unknown, but concerns about intervention have been quite strong. Volatile moves are likely to continue.
Chidu Narayanan, chief APAC strategist at Wells Fargo Securities in Singapore:
“The pace of yen depreciation, the yen weakness versus peers, and the low market liquidity on holidays is the perfect environment for the MOF to be stepping in.”
Historical precedent suggests the dollar-yen could fall further if Japanese authorities have intervened.
Christopher Wong, a strategist at Oversea-Chinese Banking Corp. in Singapore:
The yen erasing its earlier loss indicates a high likelihood that the Japanese authorities are in the market. Recent weakness “likely raised the alarm for intervention” but any efforts may not be effective given wide US-Japan yield differentials.
Rodrigo Catril, a strategist at National Australia Bank in Sydney:
There are “rumors of intervention, rate check, but we have not seen anything official.” The market is very jumpy and with not a lot of liquidity, the yen becomes a sharp toy to play with.
–With assistance from Yumi Teso and Erica Yokoyama.
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