Japan Intervenes to Support Yen for the First Time Since 1998
(Bloomberg) — Japan intervened to support the yen for the first time since 1998, seeking to stem a 20% decline against the dollar this year amid a widening policy divergence with the US.
Most Read from Bloomberg
The yen rose as much as 2.3% against the dollar, pulling back sharply from the lows of the day when it had breached a key psychological level of 145, as top currency official Masato Kanda said the government was taking “bold action.”
The intervention, coming after the Bank of Japan insisted it will hold its negative-rate policy even as the Federal Reserve hikes aggressively, indicates how a pain threshold had been reached as hedge funds kept adding to short bets on the yen. The question now is whether the unilateral action will work.
“At best, their action can help to slow the pace of yen depreciation,” said Christopher Wong, a currency strategist at Oversea-Chinese Banking Corp. “The move alone is not likely to alter the underlying trend unless the dollar, US Treasury yields turn lower or the BOJ tweaks its monetary policy.”
Currency intervention is an extraordinary move for a country that’s long been criticized by trading partners for tolerating or even encouraging a weak currency to benefit its exporters. The last time Japan strengthened the yen with direct intervention was during the Asian financial crisis in 1998, when the exchange rate reached around 146 and threatened a fragile economy.
It had also previously intervened at levels around 130 to weaken the currency in 2011.
The yen rose 1.7% to 141.71 against the dollar at 5:54 p.m. Tokyo. Kanda had called the moves against the currency sudden and one-sided as he announced the intervention.
Japanese authorities have been stepping up verbal warnings in recent weeks, and the Bank of Japan conducted so-called rate check in the foreign-exchange market last move to warn of speculative bets.
How Does Japan Intervene in Currency Markets?: QuickTake
On Thursday, BOJ Governor Haruhiko Kuroda and his fellow board members kept the BOJ’s yield curve control program and its asset purchases unchanged Thursday as had been widely expected. The central bank chief later said in a briefing that there may be no need to change forward guidance for two or three years, and there’s no prospect for a near-term rate hike.
The yen is the worst performer among Group-of-10 currencies. Japanese companies and households have become increasingly vocal about the negative effects of the weaker currency, as input and energy costs soar. A further slide will put pressure on the consensus between a central bank determined to stoke inflation and a government desperate to avoid a cost-of-living crisis.
“For the time being, we could see some unwinding of yen shorts, particularly if the BOJ continues to intervene in the market on the behalf of the finance ministry over early next week,” said Jian Hui Tan, strategist at Informa Global Markets. “What it probably does is buy Japan some time, in the hope that broad USD strength moderates somewhat and any further yen depreciation can be slowed.”
(An earlier version of this story was corrected to note this was Japan’s first intervention to strengthen the yen since 1998, as it had weakened the currency in 2011)
Most Read from Bloomberg Businessweek
©2022 Bloomberg L.P.
The Japanese yen rose sharply against the dollar on Thursday after authorities intervened in the foreign exchange market for the first time since 1998 to shore up the battered currency. The dollar fell over 1% to as low as 142.3 yen, having earlier traded more than 1% higher against the Japanese currency. The Japanese government intervened in the foreign exchange market to sell dollars for yen to stem the Japanese currency’s recent sharp falls, top currency diplomat Masato Kanda said on Thursday.
The Wall Street Journal
Japan said it intervened in currency markets to sell dollars and buy yen, the first such intervention in 24 years, in a bid to stem the recent sharp fall of the currency.
Japan intervened in the currency market on Thursday to buy yen for the first time since 1998, in attempt to shore up the hard-hit currency after the Bank of Japan stuck with ultra-low rates. Below are details on how yen-buying intervention typically works as well as the challenges to that effort. WHEN DID JAPAN LAST CONDUCT YEN-BUYING INTERVENTION?
Nvidia Corp. Chief Executive Jensen Huang on Wednesday said he thinks it’s going to be “a pretty terrific Q4 for Ada,” the company’s next-generation chip architecture it unveiled this week, even as critics balk of a price hike during a softening in consumer demand.
(Bloomberg) — One of Asia-Pacific’s biggest insurers sees opportunities in ESG-themed equities and bonds in China as technology loses its appeal as a sustainable investment haven.Most Read from BloombergPutin Calls Up More Troops, Resumes Nuclear Threat Over UkrainePowell Signals More Pain to Come With Fed Sending Rates HigherUkraine Seizes Dozens of Russian Tanks Left by Fleeing ForcesCitadel’s Griffin Brings Billions to Miami With Political Winds at His BackUN Latest: China Stands by Russia;
(Bloomberg) — North Korea denied that it has sold arms to Russia and blasted the US and “other hostile forces” for what it saw as spreading rumors that Kim Jong Un’s regime was aiding Moscow as it fought in Ukraine.Most Read from BloombergPutin Calls Up More Troops, Resumes Nuclear Threat Over UkrainePowell Signals More Pain to Come With Fed Sending Rates HigherUkraine Seizes Dozens of Russian Tanks Left by Fleeing ForcesCitadel’s Griffin Brings Billions to Miami With Political Winds at His Bac
The airline industry’s record-breaking scramble to convert older passenger jets to freighters during the travel-starved years of the coronavirus pandemic threatens to bring a glut of cargo space as a dimming global economic picture hits demand. Analysts say aircraft lessors, who helped drive a tripling in annual conversions since 2019, now face not only fallout from falling rates for cargo and freighter leases, but could get stuck with excess freighters or be forced to cancel conversions. “This surge in conversions has raised some concerns about a bubble,” said Chris Seymour, the head of market analysis for aviation advisory group Ascend by Cirium, who fears there could be a slowdown by the middle of the decade.
Japan’s finance ministry said Thursday it intervened in the currency market to bolster the yen, which has plummeted against the dollar in recent months on the widening policy gap between the US and Japanese central banks.
(Bloomberg) — The world’s most acute market risks from the Federal Reserve’s monetary tightening to Beijing’s Covid Zero pursuit are hammering Chinese stocks, pushing a key gauge to the lowest in more than a decade as analysts struggle to predict a bottom. Most Read from BloombergPutin Calls Up More Troops, Resumes Nuclear Threat Over UkrainePowell Signals More Pain to Come With Fed Sending Rates HigherUkraine Seizes Dozens of Russian Tanks Left by Fleeing ForcesCitadel’s Griffin Brings Billion
Jonathan Garner, chief Asia and emerging markets strategist at Morgan Stanley, discusses Federal Reserve policy, the outlook for EMs and economies, and the investment opportunities he sees. The Fed raised interest rates by 75 basis points on Wednesday for the third time in a row and forecast a further 1.25 percentage points of tightening before year end. Garner speaks with Yvonne Man and David Ingles on “Bloomberg Markets: China Open.”
(Bloomberg) — Emerging and frontier market nations need to manage their debt better after being priced out of global markets, according to Kenya’s central bank governor.Most Read from BloombergPutin Calls Up More Troops, Resumes Nuclear Threat Over UkrainePowell Signals More Pain to Come With Fed Sending Rates HigherUkraine Seizes Dozens of Russian Tanks Left by Fleeing ForcesCitadel’s Griffin Brings Billions to Miami With Political Winds at His BackUN Latest: China Stands by Russia; Zelenskiy
Xpeng has diversified its battery suppliers and no longer counts industry giant CATL as its primary supplier, the Chinese electric car maker’s president said on Wednesday. The disclosure by one of CATL’s biggest clients reflects how Chinese EV automakers are starting to look for alternative suppliers in hope of better controlling costs, after dominant player CATL raised prices this year. Xpeng was CATL’s third-largest client after Tesla and Nio in terms of battery volumes installed in 2021, according to Chinese consulting firm Gaogong Industry Institute.
Europe’s decade-long experiment with negative interest rates, which ended on Thursday with the Swiss National Bank’s return to positive territory, showed one thing: they can exist beyond the realms of economic science fiction. Launched to revive economies after the 2007/08 financial crisis, the policy flipped standard money wisdom on its head: banks had to pay a fee to park cash with their central banks; some home-owners found mortgages that paid them interest; and rewards for the act of saving all but vanished. “I think that probably the bar is going to be higher in the future,” said Claudio Borio, head of the Monetary and Economic Department of the Basel-based Bank of International Settlements which acts as bank to the world’s central banks.
Nvidia (NVDA) stock has been through the wringer this year and even the latest announcements made by the chip giant at its fall GTC gathering didn’t really help to move the needle on the shares. NVIDIA announced the launch of the next-generation GeForce RTX 40 Series GPUs powered by the Ada Lovelace architecture. In his keynote, CEO Jensen Huang called the new GPU a “quantum leap” which will give creators the ability to build fully simulated worlds. The H100 — touted as the most powerful AI-foc
When Stephanie Cheung bought a small, two-bedroom apartment for HK$7.7 million ($981,041) as an investment in April 2021, she booked a 6% gain by the summer as Hong Kong’s property market boomed to historical highs. The price surge was driven in part by optimism that Hong Kong’s borders would reopen after some of the world’s most stringent COVID-19 measures over the past two-and-a half years. The price of Cheung’s 450 square foot flat has dropped 6%, and the rental income of HK$16,300 is no longer enough to cover mortgage repayments after monthly interest increased by HK$2,400 a few months ago.
(Bloomberg) — Stocks wavered after a host of central banks followed the Federal Reserve with rate hikes as they rush to get to grips with inflation spiraling out of control. Most Read from BloombergPutin Calls Up More Troops, Resumes Nuclear Threat Over UkrainePowell Signals More Pain to Come With Fed Sending Rates HigherUkraine Seizes Dozens of Russian Tanks Left by Fleeing ForcesCitadel’s Griffin Brings Billions to Miami With Political Winds at His BackUN Latest: China Stands by Russia; Zelen