Verbal intervention on Japanese yen

The deputy minister responsible for exchange rate policies in Japan stated that they will not allow speculative movements in the yen. The most effective verbal intervention in the exchange rate in Japan in recent months was made. Deputy Minister of Finance Masato Kanda, responsible for exchange rate markets, said that the recent weakening in the Japanese yen had no basis and that there was clearly a speculative movement. Speaking to reporters, Kanda said, “We will take appropriate steps against excessive fluctuations. We are not ruling out any option. We are always ready.” Following Kanda’s statements, the dollar/yen fell from 151.4 to 151.1. The dollar/yen exchange rate had risen to 151.86 on Friday. Goldman Sachs raised its estimate for the dollar/yen exchange rate in three months from 145 to 155 and its estimate for the exchange rate in six months from 142 to 150, thinking that the current macro policy line will weaken the Japanese currency. Although the Bank of Japan switched to positive policy rates for the first time since 2007 in March, messages that the “supportive policy will continue” created weakness in the yen.