Finance Minister Masajuro Shiokawa said Friday that monetary authorities conducted yen-selling, dollar-buying intervention to arrest the yen’s rise, marking the third time they have stepped into the currency market in the past two weeks.
“Recent foreign-exchange rate movements have been too rapid,” Shiokawa said in a prepared statement. “We have taken appropriate action today in the foreign-exchange market as a followup to last week’s operations.”
Shiokawa also hinted that Japan may again intervene in the currency market if the need arises.
“We will continue to monitor the market and take appropriate action as necessary,” he said.
Japan conducted yen-selling interventions twice last week.
The dollar briefly rose above 124 yen in Tokyo on Friday as the Bank of Japan conducted its yen-selling, dollar-buying operation. The market took the move as a clearer indication of its resolve to halt the yen’s rise.
At 5 p.m., the dollar was trading at 123.95-97 yen, compared with Thursday’s 5 p.m. quotes of 123.35-45 yen in New York and 124.05-08 yen in Tokyo.
On Friday in Tokyo, it moved between 123.02 yen and 124.60 yen, changing hands most often at 124.40 yen.
The BOJ intervened in the market shortly before 3 p.m., when the U.S. currency was on the verge of falling below 123 yen.
The dollar soon shot up well above 124 yen, but it later weakened and fell below 124 yen on selling by Japanese exporters and speculators, dealers said.
A dealer at a Tokyo-based hedge fund said it became clearer that Japanese monetary authorities want to keep the dollar above 123 yen.
“Today’s intervention disproved recent speculation in the market that Japanese authorities were not very serious about halting the yen’s rise and that their operations would only be intended to slow or steady the speed of its appreciation,” the dealer said.
“The market will become more cautious about further intervention,” he added.
In the early afternoon, Moody’s Investors Service Inc. announced it had cut its rating on Japan’s local currency government bonds by two notches to A2 from Aa3, putting the nation on the same level with emerging economies such as South Africa, Poland and Israel.
The announcement caused the yen to dip against the dollar, but it soon returned to its previous level and moved higher.
“There was no surprise in the announcement. The market might have reacted more if it were a one-notch cut,” said Hidehiko Inamura, vice president of the global foreign exchange sales marketing department at Citibank.
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