The Yen weakened against the Dollar this morning as speculation increases that the Bank of Japan will intervene to halt the currency appreciating further in a bid to support Japanese exporters. A strong yen will be detrimental to trade since exports will become more expensive.
Speculation was fuelled after a senior Japanese finance ministry official mentioned that the central bank could intervene without warning to weaken the Yen. He hopes that his “verbal tool” will help cool down the surging Yen.
Shortly before the official’s comments, the Yen spiked down sharply , caused by what traders cited as bids by a large U.S. bank . USDJPY surged to 79.59 from 78.27 within 3 minutes at around 05:34 GMT.
Japanese Finance Minister Yoshihiko Noda said that Yen’s rise was “one sided” and was not reflecting any economic fundamentals. However, rumours that the central bank intervened this morning have been dismissed by finance ministry officials.
“I will not comment,” the senior finance ministry official said when asked whether Japan intervened in the market.
Finance Minister Noda also declined to comments about possible intervention in the financial markets. All he said was that “It would be troublesome if it persists, and I will continue to closely watch markets.”
