Kanda of Japan Refuses to Comment on Intervention at this Time

The Japanese government’s silence on whether they intervened in the currency market on Monday has left market players guessing and the yen in a vulnerable position. Masato Kanda, vice minister for international affairs, declined to comment when asked by reporters if authorities had stepped in to prop up the yen after a sharp move that saw the dollar-yen exchange rate drop by 2%.

The yen had slipped beyond the 160 mark against the dollar earlier in the day for the first time since 1990, adding to losses of more than 10% this year. The currency briefly strengthened back to 155.06 around lunchtime.

The stark gap between interest rates in the US and Japan continues to put pressure on the yen, with expectations of the Federal Reserve cutting rates diminishing. The Bank of Japan’s decision to keep rates unchanged last week further fueled the slide in the currency.

Economists like Takahide Kiuchi from Nomura Research Institute believe that a sudden 4 yen appreciation within an hour is unusual in normal trading and that any FX intervention by the government would only buy time.

The Fed is expected to leave rates unchanged at its upcoming meeting, keeping the dynamics in the market unchanged for now. Tokyo is set to release figures on currency intervention at the end of the month, leaving market participants in the dark until then. The government’s reluctance to comment may serve to keep doubt in the minds of market players over their stance on intervention.