Japan’s currency authorities “have entered a new phase” in their handling of yen weakness

While Japan’s Ministry of Finance, nor the BoJ, have confirmed Monday’s intervention the evidence is piling up:

• UBS on the yen: “Looks like intervention”, if it was its unlikely to have a lasting impact
• Goldman Sachs says yen trading volumes skyrocketed to nearly ten times normal on Monday

Via Bloomberg comes this:

• “As far as we can tell by looking at changes in the BOJ current account, we can say there’s a high likelihood intervention took place on the 29th,” said Teppei Ino, Tokyo head of global markets research at MUFG Bank Ltd. “The amount of about ¥5 trillion is largely in line with expectations.”

The figure of circa 30bn USD is derived from the BOJ reporting on Tuesday that its current account will probably fall ¥7.56 trillion due to fiscal factors including government bond issuance and tax payments on Wednesday. Says the Bloomberg article:

• That’s much bigger than a drop of about ¥2.1 trillion estimated by private money brokers, suggesting that intervention of about ¥5.5 trillion took place.
• The analysis suggests Japan’s currency authorities have entered a new phase in their handling of forex after a rapid depreciation in the yen to beyond 160 per dollar Monday, following weeks of verbal intervention.

Bloomberg article is gated, but here is the link if you can access it.

The bad news for the MoF is that we are on the way back to 160 for another test!

This article was written by Eamonn Sheridan at www.forexlive.com.