Japan kept the markets guessing on whether they intervened to support the yen against the U.S. dollar, as officials neither confirmed nor denied the action to reduce volatility. The silence followed a sharp drop in the dollar against the yen after U.S. inflation data indicated a possible interest rate cut by the Federal Reserve in September.
Finance Minister Shunichi Suzuki did not confirm reports of a “rate check” on the euro-yen pair, which is usually a precursor to intervention. While stating that foreign exchange rates should be market-driven, Suzuki expressed concerns about rapid fluctuations.
The yen’s decline to a 37-year low against the dollar and its lowest level against the euro in years has raised worries about the impact on Japan’s economy. Market analysts believe the yen’s strength was influenced by narrowing interest rate differentials and possible government intervention.
Japanese authorities have issued verbal warnings about volatile currency movements and may release intervention data at the end of July. If confirmed, this intervention would follow a previous “stealth intervention” strategy aimed at creating market uncertainty.
© KYODO