(Bloomberg) – Forex traders braced for a possible intervention to support the yen on Monday after it hit a 32-year low and approached the key psychological level of 150 to the dollar.
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The Japanese currency closed at just under 148.70 on Friday, capping nine consecutive weeks of losses. Finance Minister Shunichi Suzuki said on Friday Japan was “deeply concerned” about rising market volatility and currency chief Masato Kanda said authorities were ready to take “bold steps.”
The strong words were just the latest in a series of warnings about speculative currency movements after the yen tumbled to its lowest level in three decades as authorities tried to dissuade traders from testing their trading strategy. ‘intervention. A rapid fall in the yen to 145.90 to the dollar last month sparked the country’s first intervention to support the currency in 24 years.
Strategists said Japanese officials won’t necessarily have a line in the sand on which to act again and will likely focus on the speed of declines. But some also said 150 was a key psychological level for Japanese citizens and that a breach would likely put pressure on the national government to act again.
“Markets could thus raise the bar further towards 150, which many investors suspect is the maximum yen drop that the Japanese authorities could tolerate at this time,” wrote UniCredit FX strategist Roberto Mialich. , in a note on Friday. With high expected volatility, “the nervousness of the markets should therefore continue”.
The yen has fallen about 23% against the dollar this year due to a widening monetary policy differential between the United States and Japan. It erased gains from last month’s interventions despite the ministry spending 2.84 trillion yen ($19.5 billion).
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