Aurelia Butler

TOKYO (Reuters) -Japan will take appropriate steps against excessive moves in the yen “without ruling out any options”, Finance Minister Shunichi Suzuki said on Wednesday, keeping markets on alert over the chance of yen-buying intervention.Suzuki told reporters he would not comment on whether Tokyo intervened in the exchange rate market overnight to prop up the yen.”Currency rates ought to move stably driven by markets, reflecting fundamentals. Sharp (OTC:SHCAY) moves are undesirable,” Suzuki told reporters.”The government is watching market developments very carefully. We’re ready to take necessary action against excess volatility, without ruling out any options,” he added.Japan’s top currency diplomat Masato Kanda told reporters earlier on Wednesday that authorities were looking at various factors, including implied volatility, in determining whether yen moves were excessive.”If currencies move too much on a single day or, say, a week, that’s judged as excess volatility,” Kanda said.”Even if that’s not the case, if we see one-sided moves accumulate into very big moves in a certain period of time, that’s also excess volatility,” he said. He declined to comment on whether the overnight yen moves were excessive.After sliding below the psychologically important 150 per dollar mark, the yen strengthened sharply overnight on Tuesday, leading some market participants to believe Tokyo had intervened to support the currency. The dollar stood at 149.200 yen in Asia on Wednesday.Japanese authorities are facing renewed pressure to combat a sustained depreciation of the yen, as investors confront the prospect of higher-for-longer U.S. interest rates while the Bank of Japan remains wedded to its super-low interest rate policy.Tokyo last intervened to buy yen in September and October last year, when the Japanese currency eventually slumped to a 32-year low of 151.94 per dollar.”We’ve only taken action that gained understanding, and we think this will remain the case,” Kanda said, when asked whether Tokyo can garner support from the United States and other Group of Seven partners on intervention. More

SINGAPORE (Reuters) – The yen sat on the stronger side of 150 per dollar on Wednesday, after an unexpected surge in the previous session stoked speculation that Japanese authorities could have intervened to support the currency.The Japanese currency was last marginally lower at 149.17 per dollar in early Asia trade, after having jumped nearly 2% at one point on Tuesday to a high of 147.30 – a move that came after the yen tumbled to 150.165 per dollar, its weakest since October 2022.”Them stepping in here would be perfectly consistent with recent warnings from top officials and past behaviour,” said James Malcolm, head of FX strategy at UBS.”Authorities may be unable turn the trend in FX markets immediately. Yet entering the market in size provides a strong signal and helps buy time for other things to fall into place that in the fullness of time then contribute to position unwinds.”Japanese authorities last year intervened to prop up the yen for the first time since 1998.Other currencies similarly fell against the yen in the previous session, with the euro losing more than 1.5% to a low of 154.39 yen. It recovered some of those losses and last bought 156.18 yen.The Aussie stood at 94.03 yen, after having fallen to an over one-month low of 93.16 yen on Tuesday.Japanese Finance Minister Shunichi Suzuki said on Wednesday that currency rates should be set by the market, while adding his usual mantra that stability was important and that rapid moves were undesirable.The country’s top currency diplomat, Masato Kanda, also said the same day he would not comment on whether Tokyo intervened in the exchange-rate market overnight, though he said that “we have only taken steps that have the understanding of U.S. authorities”.U.S. Treasury Secretary Janet Yellen said last month whether Washington would show understanding over another yen-buying intervention by Japan “depends on the details” of the situation.DOLLAR POWERElsewhere, the New Zealand dollar fell after its central bank held the cash rate steady at 5.5% and reiterated that past tightening had helped constrain spending and temper inflation as required.The kiwi slid roughly 0.4% to a three-week low of $0.5883.In the broader currency market, the dollar charged higher on the back of upbeat data on Tuesday showing U.S. job openings unexpectedly increased in August amid a surge in demand for workers in the professional and business services sector.That sent the greenback to a near 11-month high of 107.34 against a basket of currencies, with the dollar index last at 107.07.Sterling edged 0.02% lower to $1.2076, languishing near the previous session’s close to seven-month low of $1.20535.The euro similarly bottomed at $1.0448 on Tuesday, its lowest since December, and was last at $1.0470.”Markets have been rattled by yet another positive U.S. data surprise vindicating the (Federal Reserve’s) mantra of higher for longer,” said Rodrigo Catril, senior FX strategist at National Australia Bank (OTC:NABZY).”The jump in job openings suggests the U.S. labour market is easing less rapidly than implied by recent data releases…That said, not all details in the report pointed to a strong labour market.”Atlanta Fed President Raphael Bostic said on Tuesday the steady rise in long-term U.S. Treasury bond yields hasn’t yet shown signs of slowing the economy more than would be expected in a typical Fed tightening cycle. Meanwhile, Cleveland Fed President Loretta Mester said she is open to raising interest rates again.The Australian dollar rose 0.06% to $0.6305, having slid nearly 1% on Tuesday after the country’s central bank held interest rates steady for a fourth month and showed no urgency to hike again. More

TOKYO (Reuters) – Japanese authorities are facing renewed pressure to combat a sustained depreciation in the yen, as investors eye prospects of higher-for-longer U.S. interest rates while the Bank of Japan remains wedded to its super low interest rate policy.The yen strengthened sharply against the dollar on Tuesday, leading some market participants to believe Japanese policymakers had intervened to support the currency, although others said the size of the move was not convincing enough.Below are details on how yen-buying intervention works:LAST CONFIRMED YEN-BUYING INTERVENTION?Japan bought yen in September of last year, its first foray in the market to boost its currency since 1998, after a Bank of Japan (BOJ) decision to maintain its ultra-loose monetary policy drove the yen as low as 145 per dollar. It intervened again in October after the yen plunged to a 32-year low of 151.94.WHY STEP IN?Yen-buying intervention is rare. Far more often the Ministry of Finance has sold yen to prevent its rise from hurting the export-reliant economy by making Japanese goods less competitive overseas.But yen weakness is now seen as problematic, with Japanese firms having shifted production overseas and the economy heavily reliant on imports for goods ranging from fuel and raw materials to machinery parts.WHAT HAPPENS FIRST?When Japanese authorities escalate their verbal warnings to say they “stand ready to act decisively” against speculative moves, that is a sign intervention may be imminent.Rate checking by the BOJ – when central bank officials call dealers and ask for buying or selling rates for the yen – is seen by traders as a possible precursor to intervention.DID TOKYO INTERVENE AGAIN?Japan’s top currency diplomat Masato Kanda told reporters on Wednesday authorities will take “appropriate steps against excessive moves, without ruling out any options.” Kanda, who has made similar comments in recent weeks, declined to say whether Tokyo intervened overnight on Tuesday.Kanda may be relying on psychological tactics to fight yen bears, as Tokyo did last October by holding off on immediately confirming whether intervention took place.By staying mum, authorities can keep investors guessing and discourage speculators from testing the yen’s new lows – a tactic known as “stealth intervention.”Investors will know whether Tokyo intervened, and if so how much it spent, when the Ministy of Finance releases monthly intervention data, usually at the end of each month.LINE IN THE SAND?Authorities say they look at the speed of yen falls, rather than levels, and whether the moves are driven by speculators, to determine whether to step into the currency market.With the dollar having breached the psychologically important 150-yen level, many market players see 151.94 yen, where Japan last intervened, as the next threshold, then 155.WHAT’S THE TRIGGER?The decision is highly political. When public anger over the weak yen and a subsequent rise in the cost of living is high, that puts pressure on the administration to respond. This was the case when Tokyo intervened last year.While inflation remains above the BOJ’s 2% target, public pressure has declined as fuel and global commodity prices have fallen from last year’s peaks.If the yen’s slide accelerates and draws the ire of media and public, the chance of intervention would rise again.The decision would not be easy. Intervention is costly and could easily fail, given that even a large burst of yen buying would pale next to the $7.5 trillion that change hands daily in the foreign exchange market.HOW WOULD IT WORK?When Japan intervenes to stem yen rises, the Ministry of Finance issues short-term bills, raising yen it then sells to weaken the Japanese currency.To support the yen, however, the authorities must tap Japan’s foreign reserves for dollars to sell for yen.In either case, the finance minister issues the order to intervene, and the BOJ executes the order as the ministry’s agent.CHALLENGES?Yen-buying intervention is more difficult than yen-selling.While Japan holds nearly $1.3 trillion in foreign reserves, these could be substantially eroded if Tokyo intervened heavily repeatedly, leaving authorities constrained over how long they can defend the yen.Japanese authorities also consider it important to seek the support of Group of Seven partners, notably the United States if the intervention involves the dollar.Washington gave tacit approval when Japan intervened last year, reflecting recent close bilateral relations. U.S. Treasury Secretary Janet Yellen said last month the question of Washington giving the greenlight over another yen-buying intervention by Japan “depends on the details” of the situation. More

The final au Jibun Bank Japan Service purchasing managers’ index (PMI) fell to 53.8 in September from 54.3 in August, hurt by slower new business and a stalling in export orders.The index level marked the joint-lowest since January, according to the survey compiled by S&P Global and released on Wednesday. It was slightly above the flash reading of 53.3 and remained over the 50.0 threshold separating expansion from contraction since August last year. However, there were broad signs of softening in the service industry, which has underpinned the world’s third-biggest economy over recent quarters amid weak global demand for its manufactured goods. New export orders stalled, ending a 12 consecutive months expansion. A boom in inbound tourism was offset by persistent weakness in the yen, the survey showed. “Capacity pressures were also dampened in September as backlogs rose only fractionally, while firms also saw the sharpest fall in service sector employment since January 2022,” said Usamah Bhatti, economist at S&P Global.While the services sector expansion remained solid overall, the pockets of weakness last month underlines the challenge for policymakers counting on domestic demand to spur an economic recovery.Firms reporting a decrease in their workforce attributed it to not replacing those leaving voluntarily.The industry faced pressure from rising fuel, utilities and labour costs in September, but the rate of input price inflation eased compared to August.Service providers remained optimistic about their business activity for the coming 12 months, but again the degree of confidence was the lowest in eight months, with some citing inflation and high interest rates as concerns. The composite PMI, which combines the manufacturing and service activity figures, fell to 52.1 in September from 52.6 in August, staying above the break-even 50 mark for nine consecutive month. More