The Japanese yen to US dollar exchange rate hovers near a key level, with the risk of Japanese authorities intervening once again becoming a focus of attention
The Japanese yen to US dollar exchange rate is approaching a key level, with investors concerned that it may fall to 150 yen to the dollar. The yen has depreciated over the past two weeks, dropping to 149.98 yen at one point on Monday, marking the largest weekly decline since 2009. The risk of intervention by Japanese authorities has increased, especially against the backdrop of narrowing US-Japan interest rate differentials. Comments from Japan's new prime minister have eased concerns about interest rate hikes, leading to a decline in the yen. Market expectations of a rate cut by the Federal Reserve may also impact the yen's movement
According to the Zhitong Finance and Economics APP, as investors prepare for the Japanese yen to fall back to 1 USD to 150 JPY or even lower, the risk of intervention by the Japanese authorities has once again become a focus of attention.
After weakening for two consecutive weeks, the yen fell to 149.98 JPY to 1 USD on Monday. Data shows that the JPY to USD exchange rate fell by about 4.4% in the week ending October 5, marking the largest weekly decline since December 2009. The prospect of further depreciation of the yen has prompted strategists to warn that the risk of intervention by Japanese authorities increases near 1 USD to 150 JPY (with the 200-day moving average at 1 USD to 151.25 JPY).
Recent warnings from Japanese officials suggest that the market currently believes that the narrowing of the US-Japan interest rate differential will not happen as quickly as previously expected. Japanese Prime Minister Fumio Kishida's earlier statement that "the Japanese economy is not ready for another rate hike by the Bank of Japan" has eased concerns about a rate hike by the Bank of Japan, leading to a rapid decline in the yen. Meanwhile, Federal Reserve Board Governor Lael Brainard stated on Monday that the Fed should be cautious about cutting interest rates.
Takuya Kanda, research director at Tokyo Gaitame.com Research Institute, said, "The key is whether the yen will fall below 152 JPY to 1 USD." He pointed out that this is a key level for the yen, as the last time the yen fell below this level, it quickly dropped to 160 JPY to 1 USD.
In July this year, when the yen fell to a 38-year low against the US dollar, the Japanese authorities intervened. Subsequently, the JPY to USD exchange rate rebounded significantly from the 1 USD to 161.95 JPY touched in early July to 149.98 JPY to 1 USD by the end of July.
According to data from the Commodity Futures Trading Commission (CFTC) as of October 8, leveraged funds' net long positions in the yen fell for the second consecutive week, indicating their lack of optimism towards the yen. Keiichi Iguchi, senior strategist at Resona Holdings, said that if expectations for a Fed rate cut are revised, the yen could still face selling pressure.
However, some strategists believe that the Japanese authorities have a long way to go before deciding to intervene again. Eiichiro Miura, head of the Strategic Investment Department at Nissay Asset Management, said, "Unless the yen falls below 160 JPY to 1 USD, (the Japanese authorities) will not intervene."