Speculators Eye Yen Depreciation

Jul 16, 2024 | News On Japan

TOKYO - The yen exchange rate surged rapidly amid moves perceived as intervention by the Japanese government. Meanwhile, speculators are eagerly eyeing another chance to ride the wave of yen depreciation.

Earlier this month, the yen neared 162 yen to the dollar but rapidly strengthened to 157 yen on the 11th, presumably due to government and BOJ intervention.

Kanda, Finance Ministry, said, "No comment from me," and, "(Q. Is this going according to your plan?) There's no such thing as a plan; we're just working diligently every day."

Last week’s presumed intervention had a major difference compared to previous actions over the past two years. Japan's forex interventions have traditionally occurred during yen depreciation. However, last week’s move seemingly supported the yen’s appreciation.

Kanda likely aimed to surprise speculators who have profited from yen depreciation.

Kanda, Finance Ministry, noted, "Considering various objective data, it’s not surprising to think that a significant part of the yen depreciation is due to speculation. If this threatens citizens’ livelihoods, it's problematic."

In the past, hedge funds launched an attack on the British pound, leading the central bank to intervene desperately. However, the speculators ultimately prevailed, resulting in the "Pound Crisis."

Speculators Laughing: ‘More Yen Depreciation to Come’?

Japan's unexpected intervention leading to yen appreciation raises the question: will speculators retreat?

Economist Itsuo Toyoshima commented, "From the perspective of American speculators, they’re laughing. 'We did it!'"

Economist Itsuo Toyoshima, who has ties with overseas hedge funds, shares that foreign investors betting on yen depreciation viewed last week’s intervention as an opportunity.

Toyoshima stated, "When talking to them, they say 'We can still go further.' While market participants in Japan fear intervention, New York speculators welcome it, seeing it as another profit-making opportunity. They’re thanking Mr. Kanda."

Toyoshima likens government and BOJ intervention to a game:

Toyoshima remarked, "Japan’s forex intervention is like 'whac-a-mole.' Even if some speculators are beaten down, others quickly emerge elsewhere. They believe yen depreciation will continue up to around 164-165 yen."

Source: ANN

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