The yen continues to depreciate against the USD.

The yen price fell to 145 yen per dollar this morning, approaching the level of September last year - when Japan had to intervene to support.

The yen is currently down 0.2% against the US dollar to 145.07 JPY per USD. The yen's fall to an eight-month low against the USD has recently prompted Japanese authorities to closely monitor the currency and declare their readiness to act.

The yen weakened in mid-month after the Bank of Japan (BOJ) announced on June 16 that it would keep its short-term interest rate unchanged at -0.1% and its 10-year bond yield ceiling at 0%. This move contrasted with the European Central Bank (ECB) and the US Federal Reserve (Fed). The BOJ also assessed that "domestic and foreign economies and financial markets still face many uncertainties".

Last year, the yen fell to 146 yen per dollar, forcing Japan to spend $65 billion buying its currency, pulling the yen from a 32-year low against the dollar. It was the first time it had saved the yen since 1998.

USD/yen exchange rate developments over the past year. Chart: Bloomberg

Many investors have recently pointed to the 145 yen level as a new intervention threshold. “The Japanese authorities may choose to intervene on a small scale in the coming weeks to warn off speculators,” said Sean Callow, senior currency strategist at Westpac Banking Corp.

Japanese officials and business leaders have recently become more optimistic about this year’s depreciation than they were last year, a sign they see the yen’s weakness as temporary.

After the yen broke the 145 yen mark to the dollar, Japanese Finance Minister Shunichi Suzuki reiterated this morning that they would react if the volatility became too strong. He also said that the currency market has been volatile and one-sided recently. Vice Finance Minister Masato Kanda also said earlier this week that he would not rule out any possibility when asked if he would intervene in the currency market.

Ha Thu (according to Bloomberg)

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