Japan warns against excessive yen moves, repeats verbal intervention – The Economic Times
The yen surged against the dollar, triggered by speculated intervention from Japanese authorities, amid concerns over the yen’s prolonged decline. The Bank of Japan’s decision to maintain its bond purchasing guidance disappointed traders hoping for a taper, exacerbating the currency’s slide. Despite the yen’s weakening, Japanese rates are expected to remain low compared to the US, prompting continuous outflows of Japanese capital. The possibility of intervention, if confirmed, indicates authorities’ willingness to address the yen’s depreciation, likely signaling further action if the yen breaches the 160 level. A weaker yen benefits exporters but poses challenges for policymakers, impacting import costs and inflation. The BOJ faces limitations in managing currency fluctuations while striving for sustainable inflation, with intervention possibly providing temporary relief. However, long-term currency dynamics are influenced by broader macroeconomic factors, necessitating significant policy shifts for lasting effects. The recent intervention, if part of a coordinated effort with policy adjustments, could offer a more impactful response to yen depreciation.
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