Yen falls in the high 157 yen range, accelerating decline after US index release – also below the intervention warning line – Bloomberg

In the foreign exchange market on the 26th, the yen fell against the dollar to the 158 yen level for the first time in about 34 years. The yen depreciated as the Bank of Japan decided to maintain the status quo of monetary policy. There was nothing new at Governor Kazuo Ueda’s regular press conference, and yen selling has further intensified following the release of US economic indicators. Markets are increasingly wary of the government and Bank of Japan’s intervention to buy the yen.

In late New York time, the yen briefly fell 1.8% against the dollar to 158.44 yen. Finance Minister Masato Kanda’s past statements suggest that he is interfering with the situation. After Governor Ueda’s press conference, the yen rapidly repurchased itself, and at one point hit 154.99 yen, but this was a temporary rebound.

“The Bank of Japan has once again shown that it is capable of dovish surprises that surprise even the most dovish expectations in the market,” said Charu Chanana, head of currency strategy at Saxo Capital Markets. “We are back to waiting for an intervention to stop the yen’s depreciation. But unless there is a concerted move and the support of a hawkish policy message, any intervention will be futile.”

Finance Minister Kanda’s statement According to our analysis, 157.60 yen was a noteworthy level. The Ministry of Finance will publish the results of its interventions from March 28 to April 25 on the 30th. However, we will have to wait until the 31st of next month to announce the data on whether the intervention occurred on the 26th.

announced on this day The US personal consumption expenditure (PCE) core price index was in line with market expectations, allaying concerns that persistent inflationary pressures would delay a US rate cut, but the yen nevertheless extended its decline.

Also, in April The University of Michigan Consumer Confidence Index (confirmed) was 77.2, down from 79.4 last month. The preliminary figure is 77.9. The median forecast of economists compiled by Bloomberg was 77.9. Inflation expectations for the year ahead rose to 3.2%, the highest level since November last year.

The yen’s move to new lows after the Bank of Japan’s policy announcement is “justified,” and foreign exchange intervention has “no chance of success,” said George Saravelos, head of foreign exchange research at Deutsche Bank, in a report. Pointed out.

Saraveros expressed the view that Finance Minister Shunichi Suzuki’s verbal intervention had been toned down, and Governor Ueda did not make much of the significance of the yen’s depreciation at the press conference after the policy announcement, saying, “Japan has adopted a policy of being on the sidelines of the yen. The market has finally realized that they are continuing to do so.”

Saraveros said intervention cannot be ruled out if market movements become disorderly, but for the yen to continue rising, “the Bank of Japan needs to enter into a cycle of rate hikes similar to what other central banks have implemented after the coronavirus pandemic.” said.

The yen has already fallen more than 10% against the dollar this year, making it the worst performer among the 10 major currencies.

The yen is “incredibly weak,” said Justin Onuekwusi, chief investment officer at St. James’s Place Management. “Anything this weak would certainly cause concern. “We think the yen will rise rather than fall from its current level.”

The fact that next Monday (April 29th) and Friday (May 3rd) are public holidays in Japan will also trigger market movements, and there is a risk that volatility will increase amid light trading.

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Original title: Yen Drops Beyond 157 Per Dollar as BOJ Keeps Key Rate Unchanged, Japan Has Policy of ‘Benign Neglect’ on Yen, Says DB’s Saravelos (excerpt)

(Update the level of the yen)