By: Hillel Fuld
After talk by Japanese Finance Minister Naoto Kan about his desire to see the Yen weaken, the JPY indeed sled against the USD as a result of the impression that the country would get involved more actively in the rise of the Yen.
Kan implied that, due to the JPY’s impact on the economy, he was interested in cooperating with the bank of Japan to bring the Japanese currency to an appropriate level. Additionally, he explained that various Japanese companies were actually interested in seeing the USD at a 95 Yen level.
"The chances of intervention in cases where the yen truly rises has increased considerably compared to when (Hirohisa) Fujii was finance minister," said Masafumi Yamamoto, chief foreign exchange strategist, Japan for Barclays Capital.
As opposed to the 92.20 Yen level that the Dollar was at prior to Kan’s remarks, the Dollar surged to as high as 92.87 following them.
Kan’s controversial comments were in direct contradiction to his predecessor Hirohisa Fujii’s philosophy that was more than accepting of a stronger Yen. Japan’s intervention in the markets is something we have not seen since 2004.
"His comments were too direct and show he is unfamiliar with dialogue with the market," said a strategist at a Japanese bank, referring to the new finance minister.
"Also, it is clear that he is less tolerant of the yen appreciating ... I doubt if Japan will intervene in the market anytime soon unless the yen firms beyond 85 yen," the strategist said.
JPY Slides VS. the USD as a Result of New Japanese Intervention Policy
DailyForex.com