The yen swung sharply in New York trading on 18 September, briefly reaching the upper ¥156 range per US dollar. Against the backdrop of the BOJ’s rate-hike decision and reports of a rate check, market participants are focused on the risk of intervention by the government and the BOJ.
The yen exchange rate swung sharply in the New York foreign-exchange market on 18 September, briefly reaching the upper ¥156 range per US dollar. Dollar buying and yen selling initially prevailed, but the yen was then rapidly bought back, with the exchange rate moving toward yen appreciation within a short period.
At a monetary policy meeting held into the early hours of 18 September, the BOJ decided to raise its short-term policy rate target to approximately 1.25%. This is the highest level in approximately 31 years. However, 2 of the 9 policy board members, Asada Toichiro (浅田統一郎) and Sato Ayano (佐藤綾野), voted against the decision.
Against this backdrop, government officials disclosed that the BOJ had conducted a “rate check” with private-sector banks, inquiring about foreign-exchange trading levels, from late on 18 September into the early hours of 19 September. This heightened market vigilance over intervention involving actual funds, prompting rapid yen buying.
The latest rate check is viewed as a preparatory step before formal intervention and is believed to have the effect of sending a strong signal from the BOJ to the market. In late July, when yen depreciation accelerated excessively, intervention on a ¥6 trillion–¥7 trillion scale took place. The possibility of further intervention continues to be closely watched.