Japanese Yen: Joint intervention supports yen outlook – MUFG
MUFG’s Lee Hardman notes that the Japanese Yen has strengthened as Japan and the US conducted joint intervention to counter recent volatility. He highlights planned use of the Federal Reserve’s FIMA Repo Facility, US euro-to-yen reallocations, and Japan’s sizeable FX reserves.
Japanese Finance Minister Katayama confirmed that the Japanese Yen strengthened alongside the US after joint intervention to counter recent volatility. This intervention, the first since 2011 following the Tohoku earthquake and tsunami, aimed to counter excessive volatility and disorderly movement in the yen. The move was supported by planned use of the Federal Reserve's FIMA Repo Facility, US euro-to-yen reallocations, and Japan's sizable FX reserves.
Hardman also noted that more hawkish Bank of Japan guidance and lower oil prices further reinforced support for the Yen. The statement from Finance Minister Katayama revealed that Japan plans to use the FIMA Repo Facility in the future, enabling temporary borrowing of US dollars without selling Treasuries, which could reduce the need for Treasury sales.
Overall, the development increases confidence in forecasts predicting a bottoming out of the yen, and suggests the Bank of Japan may raise rates sooner rather than later.
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