Yen Strengthens Despite the Possibility of Market Intervention

October 28 00:00 2011

New York, October 28 ( – Despite the possibility that Japanese financial authorities might try to weaken the yen through market intervention, the dollar remained under downward pressure against the yen in Asia Friday. Dai Sato, senior vice president of the foreign exchange division at Mizuho Corporate Bank said “The biggest focus remains intervention. Without such action, the pair won’t bounce back.”

Although market appetite for taking risk has strengthened over renewed optimism that stemmed from Thursday’s plan to solve Europe’s sovereign debt crisis and the consequent global stock market rally, the yen could not be weakened against the dollar as it is typically considered a “safe haven” asset in times of market turmoil.

At 0450 GMT, the dollar was at Y75.87, after hitting a fresh record low of Y75.66 overnight, according to EBS via CQG. The chances of government action by Japan seemed to be fading as the Asian trading day advanced. Tomoko Fujii, senior FX strategist at Bank of America Merrill Lynch in Tokyo said “Even if the dollar hit a fresh record low overnight for the third consecutive day, recent tight movements and the stock market rally have apparently made (the finance ministry) hesitant to decide on intervention.”

Fujii noted that upcoming events such as the G-20 summit in Cannes on Nov. 3-4 may make Japan reluctant to act.

The euro was at $1.4172 from $1.4189 late New York Thursday, and at Y107.52 from Y107.70. The U.K. pound was at $1.6077 from $1.6083. The dollar was at CHF0.8616 from CHF0.8598.