Japan likely to intervene if yen falls well below 152 vs $, says ex-FX diplomat Yamazaki

TOKYO : Japanese authorities will likely intervene in the currency market if the yen breaks out of a range it has been in for years and falls well below 152 per dollar, former top currency diplomat Tatsuo Yamazaki said on Thursday.

Once the dollar climbs above 152 yen, the pair’s rise could accelerate and offer an opportunity for authorities to intervene, Yamazaki told Reuters in an interview.

“If authorities leave such dollar/yen rises unattended, they would put their credibility at stake,” he said.

The fact Japanese authorities have described recent yen declines as driven by some “speculative moves” suggest the authorities are seriously contemplating whether to step in or not, said Yamazaki, who oversaw Japan’s 35 trillion yen intervention campaign to weaken the currency in 2003 through 2004.

Tokyo likely wouldn’t face much heat for intervening in the market to prop up the yen as doing so would not put the country’s exports at a competitive advantage against that of other countries, he said.

The yen has been on a downtrend despite the Bank of Japan’s decision last month to end eight years of negative interest rates, as traders interpreted its dovish language as signalling that the next rate hike would still be some time away.

Markets remain on alert for the chance of intervention by Tokyo as the dollar hovers near the 34-year high of 151.975 hit on Wednesday of last week.

When the dollar hit that high Finance Minister Shunichi Suzuki said authorities were ready to take “decisive steps” to counter speculators in the strongest hint that yen-buying intervention could be imminent.

Yamazaki said the BOJ’s lack of confidence in the policy outlook, which is reflected in Governor Kazuo Ueda’s dovish message, was likely giving speculators an excuse to sell the yen.

The BOJ governor should have said more clearly that the bank will raise interest rates at least once more this year, to keep yen bears at bay, Yamazaki said.

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