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Traders Expect BoJ to Have Used ~US$59B to Intervene in JPY FX Rate This Wk
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Reuters reported that USD/JPY recovered 5% from a 34-year low of 160.245 on Monday (29 Apr), and is expected to record the biggest one-week gain in more than a year. Japan has not confirmed that it has intervened in the exchange market. However, traders estimated that the Bank of Japan (BoJ) had used nearly $59 billion (equivalent to about JPY9 trillion) this week to defend the exchange rate. According to the report, although the Japanese government has US$1.3 trillion in currency reserves, it only has US$155 billion in USD deposits as liquid assets. Japanese authorities last intervened in the exchange market in September-October 2022, when about US$60 billion was used. Rob Carnell, head of Asia-Pacific research at ING, commented to Reuters that BoJ's intervention only suspended JPY's decline, but the currency's exchange rate will inevitably be tested by the market. He added that selling JPY has become a dream trade for traders, who can be bearish on JPY's exchange rate, and close for arbitrage when USD/JPY rises and trigger BoJ interventions. AAStocks Financial News |
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