The Japanese currency broke the 150 yen per dollar level against the dollar, its weakest since August 1990. Earlier verbal interventions by the Japanese finance minister, who warned of market intervention if the yen continued to weaken significantly, did not help.
“We cannot tolerate extraordinary and rapid movements in the currency market that are based on speculative decisions. We will monitor the situation closely,” Japanese Finance Minister Shunichi Suzuki told reporters a few days ago. However, he did not specify what level of the yen-dollar exchange rate would prompt the Japanese central bank to intervene in favour of the domestic currency.
The weakening of the yen was not helped by the strong words of the finance minister
But the fact is that the US dollar has already strengthened by about 30 per cent against the Japanese yen since the beginning of this year. This has not been helped by the verbal interventions of either Treasury chief Suzuki or other Japanese authorities who have an influence on investor sentiment.
Will the Bank of Japan intervene?
The question is whether and possibly when the Bank of Japan could intervene to support the yen. It last did so during September and has already spent nearly $20 billion on interventions this year. But it is possible that the Bank of Japan will wait a while longer to test the will of investors.