New intervention debates

Discussions about intervention continue on the Japanese yen, which gained 2 percent against the dollar on Thursday. The Bank of Japan asked investors about their benchmark exchange rates against the euro. This is seen as a leading intervention indicator in Japanese forex markets. However, officials are not making a clear statement about the possible intervention. Japanese Deputy Treasury Minister Masato Kanda, who is responsible for the exchange rate, said in a statement on Thursday evening that he was not in a position to say whether the recent appreciation in the yen was an intervention. Kanda stated in a statement on Friday that there may be speculation behind the move, given the US-Japan yield spread. Ruchir Sharma, Head of Nomura FX Options Desk, commented on the yen movement by saying, “We are currently seeing two-way movement in the market, but there is no clear directional trend. There is a noticeable tension in the market as hedge funds want to protect their carry trades.”