Forex
Home›Forex›Central Banks›Yen rebound needs more than FX intervention, BlackRock…
Yen rebound needs more than FX intervention, BlackRock says
Rick Rieder said the yen, near 160 per US dollar, would need a hawkish Bank of Japan path as US interest rates remain much higher.
BlackRock’s Rick Rieder said supporting a yen rebound will require hawkish signals from the Bank of Japan, noting that FX intervention alone is not durable. He said Japan’s currency has edged back toward 160 per US dollar this week, which partly unwinds earlier US-Japanese efforts around the start of the month.
Rieder argued that intervention would have to continue with “a lot of fire power” and, more importantly, that monetary policy must shift to a level the market believes will lead to higher rates. He said investors need confidence that Japan will be hawkish when needed to counter interest-rate differentials that favor the dollar, according to Bloomberg.
He compared Japan’s benchmark rate of 1% with the Federal Reserve’s target range of 3.5% to 3.75%, and referenced reporting that Japan’s government is supportive of a near-term hike. People familiar with the matter said the next BOJ move could come in September or October, while swaps pricing indicates a Fed increase by year-end and Rieder pointed to another BOJ increase in September, with a possible delay to December.