Yen moves in negative zone under supervision of Japanese authorities

Yen declined on Wednesday in Asian trade against a basket of major rivals, extending losses for the third straight session against the dollar and trading below 155 yen per dollar, which boosts the likelihood of another direct intervention by Japanese authorities. 

Analysts noted that any intervention by the Bank of England would only represent a temporary reprieve for the yen due to the stark difference in interest rates between Japan and the US. 

Yen is also pressured by the revival of US 10-year treasury yields, which hurts the appeal of yen against the dollar.

The Price 

USD/JPY rose 0.4% today to 155.27 yen, with a session-low at 154.52, after the yen marked a 0.5% loss against the dollar yesterday, the second loss in a row on profit-taking off three-week highs at 151.86. 

Japanese Authorities 

Bank of Japan Governor Kazuo Ueda said the BOJ will monitor the impact of yen’s movements on inflation closely.

Japan’s finance minister Shinuchi Suzuki reiterated his warnings that authorities are prepared to intervene and stem volatile movements in the forex market. 

Traders believe that Japanese authorities intervened for at least two days last week to boost the yen after trading below 160 yen per dollar.

The Wall Street Journal reported the government’s intervention spanning Monday and Wednesday, with a focus on low-liquidity days to maximize effects. 

Interest Rate Gap

The current US-Japan interest rate gap stands at 540 basis points in favor of the US, and such a gap will continue to offer support for the dollar.

The gap could shrink multiple times this year as the Federal Reserve  prepares to ease policies. 

US Yields

US 10-year treasury yields rose by 0.4 basis points today, holding ground above four-week lows at 4.420% amid attempts to rebound. 

Minneapolis Fed President Neil Kashkari said on Tuesday that it remains too early to say that inflation has been definitively stopped.