Home > Dynamic > Raid! The Japanese y...

Raid! The Japanese yen surged nearly 460 points in the short term, and the Bank of Japan was suspected of "turning back"

2024-05-02

442

After the U.S. market closed on Wednesday (May 1), USD/JPY fell rapidly by nearly 460 points, breaking through the five major levels of 157, 156, 155, 154, and 153, setting a new low of more than two weeks to 152.993.

Two days ago, the yen fell to a 34-year low of 160 against the dollar. According to reports, the Japanese Ministry of Finance spent approximately 5 trillion yen (approximately more than 30 billion U.S. dollars) at the time to push the yen, which was about to collapse, to unprecedented levels. About 48 hours ago, the impact of the first intervention had faded, and shortly after the U.S. cash market closed, Japan's Ministry of Finance appeared to step in again, with USD/JPY plunging within seconds, the second time in two days that Japan had intervention.

Financial blog Zerohedge pointed out that, of course, one cannot help but be amused by the Bank of Japan's spare-time intervention, which intervened for the second time in a row and pushed the yen to levels not seen since last week.

Speaking of intervention costs, while we won't know what the official intervention costs in Japan will be until the end of the month, it's worth noting that the cost of the first intervention was almost as high as one in 2022, when Japanese markets coincided with the holidays and liquidity Sex is very thin, and taking action under such circumstances will usually increase market volatility. At the time, the BOJ purchased a record amount of yen, according to a Bloomberg analysis of central bank accounts.

Takuya Kanda, research director at Gaitame.com research institute, said: "Despite 5 trillion yen being invested in a market where there should have been little trading activity, the yen was pushed up by just over 5 yen, and quickly "It just restored more than half the value," he said, "which doesn't seem like a very good deal" compared to the intervention two years ago.

It is worth noting that this particular intervention came just two hours after the Fed announced its interest rate decision - a decision that was seen as dovish due to a larger-than-expected QT reduction. In fact, if the Fed becomes hawkish and the dollar surges, there will be no point in intervening.

In fact, one could argue that the Bank of Japan and the Ministry of Finance - which discussed the intervention with Powell and Yellen in advance - received some assurances that, on their part, the Fed and Treasury would not see a surge in the dollar in the near future. In fact, one might speculate that Yellen actually leaked the next Non-Farm Payrolls (NFP) and CPI data to the Bank of Japan so that Japan would not waste tens of billions of dollars of intervention firepower and only watch in two days By the time the yen plunged again, red-hot jobs data sent the dollar soaring.

Eamonn Sheridan, chief Asia-Pacific currency analyst at financial website Forexlive, pointed out that once again, this looks a lot like the intervention of the Bank of Japan.

They chose to act immediately after the US close. Sheridan wondered if they realized it made them look extremely vulnerable.

Of course, you can get good value for money during this period. But for one of the world's major central banks, focusing on saving money is inappropriate.

Japan’s Chief Foreign Exchange Officer Masato Kanda said on Thursday (May 2) that Japan will disclose intervention data at the end of the month.

For those unfamiliar with the Forex market, the only place open right now is New Zealand.

There are still some people doing deals in the United States, but the main liquidity has dried up. Once the UK market closed trading (a few hours ago), liquidity dropped sharply until the Tokyo market opened. Of course, New Zealand and then Australia are also active, but in the long term these are small markets. Yes, the bots are still running, but the market is currently very liquid due to a lack of interbank liquidity.

The above information is provided by special analysts and is for reference only. CM Trade does not guarantee the accuracy, timeliness and completeness of the information content, so you should not place too much reliance on the information provided. CM Trade is not a company that provides financial advice, and only provides services of the nature of execution of orders. Readers are advised to seek relevant investment advice on their own. Please see our full disclaimer.

CM Trade

As a world leading financial trading platform, CMtrade Provides comprehensive one-stop trading services and opportunities for traders.

[Products]

The platform provides over 32 kinds of popular financial products such as forex, precious metals, crude oil, indices, cryptocurrencies and more.

[System]

2 top trading systems CM Trade MT4 / CM Trade APP, powerful and easy to operate

[Service]

Comprehensive market news, professional market analysis, 7*24 hours online customer service

[Advantage]

Low cost, high leverage, flexible one-stop all day two-way trading.

[Authority]

Licensed and strictly regulated by authorities. Traders deposits are independently kept by the bank. Fast deposit and withdrawal. Fair, efficient and transparent trading environment.

Free Access
Daily Trading Strategy Download Now

CM Trade Mobile Application

Economics Calendar

Raid! The Japanese yen surged nearly 460 points in the short term, and the Bank of Japan was suspected of "turning back"

Access to global trading markets anytime and anywhere