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BOJ’s reported currency rate check

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The Bank of Japan has conducted a rate check in an apparent preparation for currency intervention, the Nikkei website reported on Wednesday, citing unidentified sources, as policymakers stepped up warnings about sharp falls in the yen.

MARKET REACTION:

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The yen rose slightly from a near 24-year low against the dollar after the report, to trade around 143.86 at 0500 GMT.

COMMENTS:

ROB CARNELL, HEAD OF RESEARCH, ASIA-PACIFIC, ING, SINGAPORE:

On possibility of BOJ intervention, “Never say never. They have been stepping up the rhetoric lately. But I would be cautious about the inevitability of their intervening. Japan is a signatory to the G20 and they have got policies about not intervening.”

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“It is also difficult… unless they stop buying JGBs, unless they raise their cash rate, it just doesn’t seem credible for them to be going to the G20 to say the yen is too weak. And intervening might at best win them a couple of hours of respite before the market does what it wants to again.”

TAKESHI MINAMI, CHIEF ECONOMIST, NORINCHUKIN RESEARCH INSTITUTE, TOKYO:

“It’s not clear whether the MOF will actually intervene in the currency market. But by conducting rate checks, it’s signaling readiness to step in to keep sharp yen moves in check.”

“My feeling is that the MOF won’t intervene at this stage and leave it at verbal warnings. There’s still a week before the Fed’s rate-setting meeting. I don’t think markets believe the MOF will intervene at current dollar/yen levels.”

(Compiled by by Ana Nicolaci da Costa)

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