Yen Breaches 160 as Japan Warns of One-Sided Moves

Japan’s Finance Minister Satsuki Katayama warned on Friday that currency moves had turned one-sided and rapid, after the yen slid past 160 per US dollar for the first time since early September, Reuters reported. The yen weakened to as low as 160.03 per dollar following what the news agency described as a hawkish reassessment of the Federal Reserve’s interest-rate path.

Speaking at a regular news conference, Katayama said Tokyo would keep working closely with the US Treasury and “respond appropriately”, according to Reuters. Investing.com reported that the dollar-yen pair was up 0.06% at 159.94 after briefly crossing 160, with the yen hit by a stronger dollar this week amid growing bets that the Fed will raise rates in December.

Intervention warnings return

Atsushi Mimura, Japan’s vice finance minister for international affairs and its top currency diplomat, said on Thursday it was “too early to forget” this year’s summer intervention, Reuters and Investing.com reported.

According to Reuters, Japan stepped into the market on three days between July 30 and August 3, spending a record 15.4 trillion yen, or about US$96.47 billion, when the currency was near 164 per dollar, its weakest in 40 years. A quarterly report from the New York Fed released on Thursday showed the US bought 79.4 billion yen in the spot market on July 31, selling euros from the Exchange Stabilization Fund, in its first yen-buying intervention since 1998, Reuters said.

Investing.com said the previous breach of 160 had triggered an unprecedented joint intervention by Tokyo and Washington that pushed the dollar down to as low as 150 yen. Katayama also said the US and Japan had shared a stance on currencies at their summit, but declined to comment on intervention, investingLive reported. The outlet added that Tokyo is bringing forward winter utility subsidies funded from reserve funds.

Tokyo markets react

The dollar briefly touched about 160.02 yen in Tokyo and stood near 159.97 at around 3pm local time, News On Japan reported. The Nikkei 225 closed 322.99 points, or 0.53%, higher at 61,142.35 on Friday, giving up much of a morning gain of 1.64%, while the broader TOPIX rose 0.11% to 3,941.57 for a fifth straight daily gain.

The benchmark 10-year Japanese government bond yield stood at 2.854%, according to the same report. SoftBank Group fell 5.11% and was the biggest drag on the Nikkei, while Fast Retailing, Recruit and Tokyo Electron supported the index, ad-hoc-news.de reported.

What’s next

The Bank of Japan, which raised rates in June and September, is widely expected to hike again in December, investingLive reported. Investing.com said the central bank opened the door to further increases after effectively declaring victory over deflation at its October meeting.

InvestingLive said the dollar-yen pair is likely to stay volatile in the weeks before the BOJ’s December meeting. Investors will also watch Japan’s preliminary third-quarter GDP figures, due at 8:50am Tokyo time on Monday, November 16, News On Japan reported.

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