The Tokyo market on the morning of the 22nd remained thin, with dollar-yen trading in a narrow range in the low ¥157s. The market was locked in a stalemate as reports of a rate check by the Bank of Japan met persistent yen-selling pressure.
In the Tokyo foreign exchange market on the morning of the 22nd, dollar-yen traded between ¥157.29 and ¥157.42, euro-yen between ¥180.34 and ¥180.48, and euro-dollar between $1.1462 and $1.1468, amid thin trading. Trading continued to lack a clear direction because of the market holiday.
Reports that the Bank of Japan had conducted a rate check with financial institutions heightened caution over moves to restrain speculative yen selling. The view that a rate check represents a preparatory stage for intervention became widespread in the market, broadening concerns about intervention.
After the yen was temporarily bought back following the reports of the rate check, dollar buying prevailed in overseas markets and the yen weakened again. In the New York market, dollar-yen held firm in the low ¥157s, while oil-price movements and long-term interest rates were seen as factors supporting the dollar.
Going forward, the focus will be on the response after trading resumes following Japan’s holiday period and the progress of yen selling in overseas markets. Attention will need to be paid to the government and Bank of Japan’s actual intervention decisions and any disclosure of their policies.