The Japanese yen slumped this week after Japan’s government intervened to trim gains for the first time since 2004, but the currency stopped its decline as the concerns for the economic growth resurfaced with the new strength.
The analysts said at the beginning of the week that the intervention looked unlikely as the candidate, who was insisting on the intervention, lost the election as the head of the ruling party and the government was considered too week to intervene. The intervention happened, nevertheless, sending the yen tumbling down.
The analysts are unsure whether the government plans to significantly weaken the currency or it just wants to stop the yen’s sharp advance. The example of the Swiss National Bank shows that the market would push the currency the way it sees fit, even when the policy makers try to influence the currency’s moves. The Japanese government most likely would be unable to noticeably weaken the yen, anyway, without the coordinated aid from the US and Europe. And these countries didn’t show the intention to help Japan to weaken its currency. The US especially unlikely to help Japan in this matter just after the US government was blaming China for artificially weakening its currency.
The yen slumped on Wednesday, as intervention occurred, but on Thursday and Friday it remained flat. USD/JPY closed at 85.79 after opening at 84.28 and tumbling to the weekly low of 82.87. EUR/JPY closed at 111.86 after it opened at 107.08 and touched the highest price this week of 112.98. GBP/JPY went up from 129.44 to 134.02.
If you have any questions, comments or opinions regarding the Japanese Yen,
feel free to post them using the commentary form below.
