From 2 to 3 September, dollar/yen plunged and the yen appreciated. Although it remains unclear whether intervention occurred, no clear signs of intervention have been found in data released by the Bank of Japan, while market speculation about a review of GPIF's asset allocation is also spreading.
Since 2 September, dollar/yen has fallen rapidly, with the yen appreciating by more than ¥4 over 2 days. Cross-yen pairs have also fallen across the board, and expectations are growing that the period of yen appreciation will continue.
Debate continues over whether intervention occurred, but the move on 2 September is said to have shown no clear signs of intervention by the Bank of Japan. A method for estimating the scale of intervention based on the gap between factors behind changes in current account balances published by the Bank of Japan and market expectations has been introduced.
Speculation that GPIF may review its asset allocation has been cited as a background factor in fund flows. An extraordinary meeting in August is said to have discussed a review of the basic portfolio, and markets are speculating that the allocation to domestic bonds could be increased.
The yen's current appreciation cannot simply be described as a risk-off move, and one view is that domestic interest rates and developments at GPIF are affecting supply-demand conditions. Attention is also focused on factors ahead, including interest-rate trends in Japan and the United States and the release of employment data.