Japan may intervene to weaken its currency as the yen approaches its strongest level versus the dollar this year, according to Pierpont Securities LLC.
The nation may step in to slow the yen, which has gained 3.7 percent since Dec. 31, as it trades less than 1 percentage point from its 2014 high of 100.76 per dollar, Robert Sinche, global strategist at the Stamford, Connecticut-based brokerage, said during a radio interview on Bloomberg Surveillance with Tom Keene.
"The question is, if it gets down there, are we going to see any official intervention on the part of the Japanese to try to prevent it," said Sinche. "There are very few people on the policy side who'd want a stronger yen."
The currency strengthened 0.3 percent to 101.56 against the dollar as of 1:46 p.m. Tuesday in New York. It last traded stronger than 100 yen in November.
Japanese policymakers are looking to a weaker yen to lift efforts to boost growth and end two decades of economic stagnation. The nation is more than 18 months into a three-pronged program of reforms announced by Prime Minister Shinzo Abe to revive Japan's international competitiveness. Exports continue to lag shipments when Abe came to power in December 2012.
"Japan's a bit of old school in terms of the way they think about it, and they very much do announce when they come in and make it very obvious when they intervene," said Sinche. "If it goes through 100.76, then I think it pretty quickly tests 100, and they certainly don't want to get below 100 in dollar-yen."
The Bank of Japan last sold yen in the foreign-exchange market in November 2011, after the currency strengthened to a post-World War II high of 75.35 on Oct. 31, 2011.