Yen Snaps Earnings amidst Intervention Talks
The Japanese yen posted the first daily decline against the euro and the pound and the second against the U.S. dollar as the Asian stock markets rebounded and the intervention talks arose in Japan.
The extremely fast growth of the yen for almost 6 days set up the speculations that the Japanese central bank may use a currency interventions to support the national exporters. Japans Finance Minister Shoichi Nakagawa said that the government is ready to act against the currencys imbalanced appreciation if needed.
The Nikkei index gained 6.4 percent in Tokyo today, spurring some confidence into the global financial stability. It would be a premature decision to believe that the troubles and crisis are over, but the current long-term bearish trend gets a break at least for today.
Currency market analysts believe that the Bank of Japan will use intervention to slow down the yens growth after it gained 14 percent against the U.S. dollar and 29 percent against the euro this month. Its quite unlikely that the trend will be broken, but the yen will certainly correct if the intervention is used.
Group of Seven officials also expressed concern about the yens surprisingly high volatility during the last several weeks. The first yen intervention since March 2004 can be a direct reply to this statement.
USD/JPY rose from 93.29 to 94.68 as of 9:14 GMT today. EUR/JPY advanced from 116.18 to 118.39, reaching a daily high at 120.56. GBP/JPY went up from 144.82 to 147.64 after peaking at 151.16 today.
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