Ahead of Japan’s long holiday, the government and the BOJ conducted another rate check, asking market participants about current exchange-rate levels. With the yen weakening, markets are becoming increasingly wary of the risk of intervention during the holiday period and of what may happen next.
Ahead of Japan’s long holiday, the government and the BOJ conducted a rate check, asking market participants about current exchange-rate levels. With the yen weakening despite the BOJ’s decision to raise interest rates, concern over exchange-rate movements during the holiday period has risen again.
Concern over actual currency intervention is expected to spread in overseas markets. According to a Nikkei report, market participants are focused on the impact of intervention at key levels. A London hedge fund said the BOJ’s rate check had caught it off guard: “We were surprised that intervention would take place at this level, with ¥160 to the dollar still some distance away. It was quite effective.”
Market participants plan to continue monitoring the situation after the holiday, and are expected to watch closely how the BOJ’s rate check affects developments in the foreign-exchange market.