Bank of Japan and Ministry of Finance ready to intervene in forex market
BOJ monitoring yen's impact on inflation and considering raising interest rates
Japanese Yen holding ground against US Dollar
Masato Kanda reiterated warning of 24-hour intervention readiness
Previous interventions saw USDJPY drop significantly after weak economic readings and dovish signals from BOJ
US Dollar Index edging higher due to Fed delaying interest rate cuts
The Japanese Yen (JPY) has been holding its ground against the US Dollar (USD) amid concerns over rapid fluctuations and their potential negative impact on the economy. The Bank of Japan (BOJ) and Ministry of Finance officials have expressed their readiness to take appropriate steps if necessary, with Masato Kanda, Japan's top currency diplomat, stating that he would intervene around the clock if required.
The US Dollar Index (DXY), which measures the value of the USD against a basket of six major currencies, has been edging higher as Federal Reserve officials continue to delay the timing of their first interest rate cut in 2024. This interest rate differential between Japan and the United States has contributed to a widespread yen weakness.
The BOJ is also closely monitoring how the yen's recent weakness impacts inflation, with some board members discussing the need for raising interest rates amid prospects of accelerating inflation. However, economic readings have been mixed, with weak signals in some areas and dovish statements from the BOJ keeping markets uncertain.
The Japanese government officials' warnings come as the yen nears key intervention levels against the USD. Previous interventions by authorities have seen USDJPY fall significantly after weak economic readings and dovish signals from the BOJ. The most recent intervention in May saw USDJPY drop to 151 yen.
The potential for further intervention comes as Masato Kanda reiterated his warning that he will instruct the BOJ to intervene if necessary, standing ready to intervene 24 hours a day if required. The BOJ's readiness to hike interest rates further if the economy picks up pace this year adds another layer of uncertainty for markets.
Japanese Yen holds ground due to verbal intervention by Japanese authorities.
Masato Kanda, Japan’s top currency diplomat, stated he would intervene in the foreign exchange market if necessary.
Accuracy
The yen remained under pressure despite the warning from Japanese authorities.
USDJPY pair rose slightly to 159.93 yen on Monday, close to its highest level in over 30 years.
Intervention by the government in May saw USDJPY fall as low as 151 yen after weak economic readings and dovish signals from the Bank of Japan (BOJ).
The BOJ kept interest rates unchanged and had no immediate plans to tighten policy further at its June meeting.
Data has painted a middling picture of the Japanese economy, which contracted in the first quarter of 2024.
The BOJ hiked rates for the first time in 17 years in March, but it provided little support to the yen due to a wide gulf between US and Japanese interest rates.
Government officials have warned they will step in to support the currency if necessary.
Intervention by the government in May saw USDJPY fall as low as 151 yen after weak economic readings and dovish signals from the Bank of Japan (BOJ).
Top currency diplomat Masato Kanda reiterated his warning that he will instruct the BOJ to intervene if necessary.
Kanda stood ready to intervene 24 hours a day if necessary.
Accuracy
Japanese yen is fragile and USDJPY pair is nearing key intervention levels of 160 yen.
The BOJ kept interest rates unchanged and had no immediate plans to tighten policy further at its June meeting.
Data has painted a middling picture of the Japanese economy, which contracted in the first quarter of 2024.
Deception
(100%)
None Found At Time Of
Publication
Fallacies
(95%)
The author does not commit any formal or informal fallacies in the article. However, there are instances of appeals to authority and dichotomous depictions. The author quotes Masato Kanda's statements about potential intervention in the foreign exchange markets and his past interventions, which can be considered an appeal to authority. Additionally, the author describes the yen as 'fragile' and mentions that it is 'close to reaching 160 yen,' implying a negative connotation towards this level. This can be considered a dichotomous depiction as it presents the yen's value at 160 yen as something undesirable or problematic.
]The pair was close to reaching 160 yen, which was its highest level in over 30 years[.
But data so far has painted a middling picture of the Japanese economy, which contracted in the first quarter of 2024.
Top currency diplomat Masato Kanda reiterated his warning that he will instruct the BOJ to intervene in markets in the event of ‘excessive’ moves in foreign exchange markets.
The minutes also showed that the BOJ was ready to hike rates further if the economy picked up pace this year.
Japan stands ready to take appropriate steps against volatile yen moves at any time.
Senior finance ministry official Masato Kanda expressed concern about the negative impact of rapid yen fluctuations on the economy.
Some BOJ board members touched on the need for raising interest rates amid prospect of accelerating inflation.
Excessive fluctuations negatively affect the economy, according to Kanda.
Accuracy
Japanese Yen holds ground due to verbal intervention by Japanese authorities.
The yen remained under pressure despite the warning from Japanese authorities.
Deception
(100%)
None Found At Time Of
Publication
Fallacies
(95%)
No formal fallacies were found in the article. However, there are some implicit assumptions and potential inflation of importance. The author reports on the statements made by Masato Kanda without explicitly stating their veracity or providing counterarguments. Additionally, the author emphasizes certain aspects of the situation, such as Japan's response to yen fluctuations and BOJ's potential interest rate hike, which may give undue importance to these topics.
Ministry of Finance. (Mainichi) TOKYO (Kyodo) -- Japan stands ready to take appropriate steps against volatile yen moves at "any time," a senior finance ministry official said Monday, as the currency neared the 160 line against the U.S. dollar, a level at which authorities have previously intervened to slow the yen's decline.
The Bank of Japan is also keeping tabs on how the yen's recent weakness impacts inflation. Some board members touched on the need for the central bank to consider raising interest rates amid the prospect of accelerating inflation, according to a summary of opinions expressed at its June 13-14 policy-setting meeting.
The wide interest rate differential between Japan and the United States has caused the yen to stay weak. Japan relies heavily on overseas energy and raw materials, and a weak yen inflates import costs.
