USD/JPY: Effect of foreign exchange market intervention
2024-07-18
■ The Bank of Japan is believed to have conducted over 5 trillion yen buying interventions for two consecutive days.
■ Despite the US dollar/Japanese yen rebound, there is still upward pressure on whether it can break through the critical 160-yen mark during the gradual recovery process.
The Bank of Japan is expected to announce that due to financial and other factors, as of the 16th, the balance of short-term deposits in the Bank of Japan will decrease by about 3.17 trillion yen. According to the forecast of private short-term capital companies, the increase or decrease in fiscal and other factors is expected to be between 200 billion and 400 billion yen, resulting in a difference of approximately 3.37 to 3.57 trillion yen. In addition, fiscal and other factors on the 17th will likely lead to a decrease of 2.74 trillion yen in the short-term deposit balance of the Bank of Japan, which is more than 2 trillion yen lower than the private forecast. Therefore, the Bank of Japan may have implemented over 5 trillion yen buying interventions for two consecutive days. The presence or absence of foreign exchange intervention will be detailed in the "Implementation Status of Foreign Exchange Balance Operations" released by the Ministry of Finance on the 31st, covering actual data and details monthly (June 27th to July 29th).
The Ministry of Finance announced that the amount of foreign exchange balance operations from April 26 to May 29 was 9.7885 trillion yen. It is believed that during the holiday break with fewer market participants in Japan, yen-buying interventions were implemented on April 29 and May 2 (specific implementation dates and daily intervention amounts will be announced quarterly, and quarterly data for April to June is expected to be released from August 1 to 7). The US dollar/Japanese yen fell from the first half range of 160 yen to the middle half range of 154 yen on April 29th and sharply dropped from around 158 yen to around 153 yen between May 1st and 2nd, indicating a corresponding intervention effect. On the other hand, on July 11th, as the June US Consumer Price Index fell below market expectations, the US dollar/yen sharply fell from the 161-yen half range to the first-half range of 157 yen within 30 minutes after the indicator was released. However, the appreciation space of the yen was limited to around 15 yen for 157 yen after that.
Although the current weakening of the US dollar is a significant reason for the appreciation of the Japanese yen, there are still signs of a slight reversal in the US dollar/Japanese yen exchange rate, and attention should be paid to its pace of correction. Today, the US housing starts, and industrial production data for June will be released. In addition, speeches are expected from Governor Waller of the Federal Reserve and President Barkin of the Richmond Fed. The US dollar/Japanese yen is being suppressed above the 160-yen mark. On the chart, the benchmark line of the daily balance sheet is at 158 yen 85 cents, and the conversion line is at 159 yen 49 cents, which may become a critical turning point.
■ Despite the US dollar/Japanese yen rebound, there is still upward pressure on whether it can break through the critical 160-yen mark during the gradual recovery process.
The Bank of Japan is expected to announce that due to financial and other factors, as of the 16th, the balance of short-term deposits in the Bank of Japan will decrease by about 3.17 trillion yen. According to the forecast of private short-term capital companies, the increase or decrease in fiscal and other factors is expected to be between 200 billion and 400 billion yen, resulting in a difference of approximately 3.37 to 3.57 trillion yen. In addition, fiscal and other factors on the 17th will likely lead to a decrease of 2.74 trillion yen in the short-term deposit balance of the Bank of Japan, which is more than 2 trillion yen lower than the private forecast. Therefore, the Bank of Japan may have implemented over 5 trillion yen buying interventions for two consecutive days. The presence or absence of foreign exchange intervention will be detailed in the "Implementation Status of Foreign Exchange Balance Operations" released by the Ministry of Finance on the 31st, covering actual data and details monthly (June 27th to July 29th).
The Ministry of Finance announced that the amount of foreign exchange balance operations from April 26 to May 29 was 9.7885 trillion yen. It is believed that during the holiday break with fewer market participants in Japan, yen-buying interventions were implemented on April 29 and May 2 (specific implementation dates and daily intervention amounts will be announced quarterly, and quarterly data for April to June is expected to be released from August 1 to 7). The US dollar/Japanese yen fell from the first half range of 160 yen to the middle half range of 154 yen on April 29th and sharply dropped from around 158 yen to around 153 yen between May 1st and 2nd, indicating a corresponding intervention effect. On the other hand, on July 11th, as the June US Consumer Price Index fell below market expectations, the US dollar/yen sharply fell from the 161-yen half range to the first-half range of 157 yen within 30 minutes after the indicator was released. However, the appreciation space of the yen was limited to around 15 yen for 157 yen after that.
Although the current weakening of the US dollar is a significant reason for the appreciation of the Japanese yen, there are still signs of a slight reversal in the US dollar/Japanese yen exchange rate, and attention should be paid to its pace of correction. Today, the US housing starts, and industrial production data for June will be released. In addition, speeches are expected from Governor Waller of the Federal Reserve and President Barkin of the Richmond Fed. The US dollar/Japanese yen is being suppressed above the 160-yen mark. On the chart, the benchmark line of the daily balance sheet is at 158 yen 85 cents, and the conversion line is at 159 yen 49 cents, which may become a critical turning point.