Bank of Japan data suggests that recent fluctuations in the yen’s value against the dollar were not due to official intervention in the currency market.
TOKYO, Jan 26 (Reuters) — Recent data from the Bank of Japan (BOJ) indicates that a significant spike in the yen’s exchange rate against the dollar on Friday is unlikely to have resulted from any official intervention by the Japanese government.
On Monday, the BOJ’s projections for Tuesday’s money market conditions revealed a net outflow of funds amounting to 630 billion yen (approximately $4.09 billion). This figure surpassed brokerage forecasts, which anticipated a range of plus 100 billion yen to minus 300 billion yen. However, it remains below the levels typically associated with actual intervention efforts.
Shoki Omori, chief desk strategist at Mizuho Securities, noted that the projected treasury-related flows and the net changes in current account balances are significantly lower than the multi-trillion-yen figures usually linked to decisive intervention. He stated, “The size of the projected treasury-related flows and the net change in current account balances are well below the multi-trillion-yen magnitudes typically associated with decisive intervention once settlement effects appear.”
Omori further explained that the recent sharp fluctuations in the yen’s value were primarily driven by position adjustments, liquidity conditions, and an increased sensitivity to official signals, rather than by any actual deployment of reserves.
As of the latest exchange rates, $1 is equivalent to 153.92 yen.
This analysis sheds light on the dynamics of the currency market and the factors influencing the yen’s value, suggesting that traders and investors are reacting to market conditions rather than anticipating direct government intervention.
Reporting by Rocky Swift; Editing by Louise Heavens, according to Reuters.