Yen slides to weakest this year without intervention
2023-10-26
Summary:
The yen slumped back past 150 per dollar again, raising the risk of forex intervention and piling pressure on the BOJ to adjust monetary policy.
The yen slumped back past 150 per dollar again, raising the risk of forex intervention and piling pressure on the BOJ to adjust monetary policy.
Treasury yields rose on Wednesday, with the yield on the 10-year rate hovering below 5% but near multiyear highs, as investors considered the state of the economy.
Japanese finance minister Shunichi Suzuki maintained a warning to investors against selling the yen, saying authorities were closely watching moves after the currency fell beyond 150 yen against the dollar.
However, investors will likely shrug off his cliché until more clarity is provided on when officials will boost the yen. It also remains unknown if they have already stepped in.
A report by the Nikkei flagged a difference of views among policymakers. Governor Kazuo Ueda awaits more evidence of a sustainable wage growth, but central bank watchers see sufficient reasons to consider taking action sooner rather than later.
The bank’s projection for its key inflation gauge could get revised higher to 2% or more for the year starting in April, according to people familiar with the matter. That will mean inflation is expected to stay above the target for three straight years.
Last week’s stronger wage demands from unions for next year’s pay negotiations also provides the central bank with a favorable factor for achieving its target.
The yen will unlikely weaken a lot further ahead of the US inflation data due Friday and the BOJ’s meeting next week. But the downtrend remains intact with RSI below 70.
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