The government and the Bank of Japan were reported to be considering another yen-buying intervention, while a rate check rattled the market. The yen moved sharply from late on the 18th into the early hours of the 19th, with some pointing to positioning ahead of thinner trading during the holiday period.
Reports indicated that the government and the Bank of Japan were considering another yen-buying intervention, while the rate check unsettled the market. The timing and background of the yen's sharp moves against the dollar are outlined.
The details of the decision released around noon on the 18th showed that 2 reflationist Policy Board members had opposed it, prompting the view that concerns about the progress of monetary policy normalization had driven yen weakness. At an afternoon press conference, the pace of future rate hikes was not clarified, and the yen was sold down to the ¥158 range.
Regarding the rate check conducted following the Bank of Japan's decision, market participants suggested that the government may have viewed the move as speculation aimed at driving the yen lower and responded accordingly. Japan was about to enter the Silver Week holiday period, raising concern about thinner trading conditions.
The government and the Bank of Japan also conducted yen-buying intervention during this year's Golden Week holiday period, and some market participants said that the authorities remain on a war footing. The market continues to watch for the possibility of intervention.