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Yen steadies near intervention gains as traders watch for more action
Japan and the U.S. coordinated yen-buying last week, with one analyst saying intervention may only “buy time” until fundamentals shift.
The yen slipped on Tuesday but largely held onto gains driven by last week’s joint intervention by Japan and the United States, leaving traders cautious about rebuilding bearish bets, according to Reuters. The currency was last down 0.4% at 157.8 per dollar, after pulling back from a three month high of 155.20 in the prior session. Still, it remained well above its 40 year low of 163.99 reached in July, following a surge of as much as 5% over the prior three trading sessions as Japan confirmed coordinated yen-buying with the U.S. on Friday. MUFG’s Lee Hardman said the intervention may support the yen in the near term, but “can only buy time,” adding that a sustainable reversal in the five year weakening trend would require a change in fundamentals, particularly Japan’s much lower interest rates versus the U.S. Reuters also cited two market sources saying the U.S. Treasury bought yen for euros last week instead of selling dollars, a move described as unusual and potentially aimed at strengthening the yen without signaling a softer dollar preference. In other currency trading, the yen was down 0.5% versus the euro at 181.62, following Monday’s almost nine month high. Reuters noted that trading volumes in dollar/yen on Monday were about $27 billion in the early window versus recent averages of $1.9 billion, and U.S. President Donald Trump said talks with Iran were under way, while Iran denied negotiations were being held or planned.