by Tetsushi Kajimoto and Yoshifumi Takemoto
TOKYO, Oct 24 (Reuters) – The yen fell again against the dollar on Monday despite suspicions of further direct intervention by Japanese authorities in the market to stem the national currency’s slide.
Since the beginning of the year, the currency has fallen by around 34% against the greenback, a vertiginous depreciation which has prompted the authorities to express their concern several times. A fall in the currency impacts import prices, which are already very high, and calls into question the Bank of Japan’s commitment to maintaining its near-zero interest rate policy.
The yen rose in session to 145.61 to the dollar, a two-week high, suggesting Tokyo was back in the market after hints of intervention already on Friday.
“We won’t comment,” Masato Kanda, deputy finance minister for international affairs, told reporters.
“We are monitoring the market 24/7 while taking appropriate action. We will also continue to do so from now on,” he added.
However, the yen failed to maintain its gains from the start of the session and was down 1.17% to 149.37 per dollar around 09:55 GMT, as traders remained focused on the growing divergence between ultra- dovish BoJ and rate hikes by other major central banks, such as the Federal Reserve (Fed).
“In past crises involving the British pound and Italian lira, authorities have ultimately failed to defend their currencies. Similarly, Japan’s stealth intervention has only limited effects,” said Daisaku Ueno, head of foreign exchange strategy at Mitsubishi UFJ Morgan Stanley Securities.
“Dollar strength is the main driver of yen weakness. If the US signals a pause in its rate hike or even a cut, the yen will stop weakening even without intervention,” he said. -he adds.
According to estimates by brokerage firms in the Tokyo money market, Japan probably bought for 5.400 to 5.500 billion yen (36.82 to 37.5 billion euros) during its supposed intervention last Friday.
That’s far more than the roughly 2.8 trillion yen Japan announced it had spent to support its currency on September 22, its first intervention since 1998.
The critical situation of the yen puts the BoJ under pressure ahead of its monetary policy meeting on Thursday and Friday, which should nevertheless result in the status quo. (Reporting Tetsushi Kajimoto and Yoshifumi Takemoto; with Chang-Ran Kim, Sakura Murakami, Daiki Iga and Leika Kihara; French version Laetitia Volga, editing by Kate Entringer)