Yen Surges as MoF Intervention Sparks Speculation
The Japanese Yen saw a significant surge in value as USD/JPY dropped from 163.00 to 158.00, according to MUFG's Derek Halpenny and Abdul-Ahad Lockhart. They attribute this move to probable Ministry of Finance intervention during New York trading.
The Bank of Japan (BoJ) kept its key policy rate unchanged at 1.00%, as expected, with an 8-1 vote. The BoJ's updated Outlook for Economic Activity and Prices showed some hawkish elements, including a mention of upside inflation risks contributed by foreign exchange developments.
The MoF intervention sparked speculation of a more hawkish communication, but the BoJ's stance does not necessarily signal a plan to increase the pace of monetary tightening from its current every 6 months pace. Halpenny and Lockhart note that there is a risk buyers will soon return to USD/JPY despite intervention risks.