Forex traders are again testing the patience of Japan’s Ministry of Finance in the Asian market session, buying yen and driving the USDJPY rate back under 100.
The earlier today during Tokyo morning trade of 99.66 was just 58 points above the three-year low of 99.08 that USDJPY fell to in the aftermath of the Brexit vote.
That’s prompted comments from Masatsugu Asakawa, Japan’s vice-minister of Finance, who said the MoF “will monitor markets closely” and “act appropriately if [there are] any excessive moves in forex market”.
But traders know while global policy makers are supportive of the convergence of monetary policy and fiscal policy in Japan, to try to reflate the economy, that sympathy does not appear to extend to foreign exchange policy or the Yen.
Which means the market also believes that threats from Asakawa and others in days past and no doubt in days to come are hollow.
That’s not so much because the MoF and the Bank of Japan can’t intervene. Rather forex traders are working on the assumption that if Japan intervenes unilaterally to sell the Yen, without the support of the other big central banks, after an initial flurry the buying will subside and USDJPY will fall again.
A short time ago USDJPY had climbed back above 100 and was sitting at 100.06