DBS: Japan may be adopting a new foreign exchange intervention strategy.
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Former head of Japan's foreign exchange industry: The yen may be undervalued by 20%, and short sellers still need to be wary of intervention risks.
According to Odaily Odaily, Tatsuo Yamazaki, former finance minister of Japan's Ministry of Finance and former head of Japan's foreign exchange policy, said in an interview on Monday that the yen should appreciate by up to 20% from its current level (about 130 yen to 1 US dollar), refuting those who bet on the yen potentially weakening further. Yamazaki stated, "This is no longer a fundamental issue, but rather a question of how market expectations will change. But we are approaching a climax." He believes that the current estimate of the yen being undervalued by 10% may be conservative. "I wouldn't be surprised if the yen rises to around 130. Frankly, that's my view." Meanwhile, Yamazaki suggested that the market should not mistake the recent apparent calm from Japanese authorities for complacency. He stated, "They have issued warnings, and anyone still holding short yen positions knows they face the risk of intervention and punishment—forced liquidation. The Ministry of Finance has gone beyond the warning stage; the authorities have indicated their willingness to take action." (Jinshi)
ING Bank: Japan may have intervened in the yen exchange rate
According to Odaily Odaily, ING analyst Francisco Pesole pointed out that Japanese authorities may have intervened in the yen's exchange rate on Thursday and may take further action on Friday amid tightening liquidity due to the US holiday. He stated that the dollar/yen exchange rate fell in early trading on Thursday, even before weak US non-farm payroll data pushed it below 161.00. "We cannot rule out that this initial decline was driven by foreign exchange intervention." He stated that despite the yen's recovery, further intervention remains a risk. Japan tends to intervene around holidays and spread out over multiple days. He noted that taking action after the dollar is adversely affected by events also aligns with Japan's 2024 strategy. (Jinshi)
Market divergence in views on the yen's outlook has intensified, with a former Japanese finance official stating that a reasonable exchange rate should be around 130.
According to BlockBeats, on July 6th, as the USD/JPY exchange rate returned to around 162, market opinions on the yen's future trajectory became clearly divided. Tatsuo Yamasaki, former Vice Minister of Finance for International Affairs at the Ministry of Finance of Japan, stated that the current yen exchange rate has significantly deviated from a reasonable level, and a level around 130 yen to the dollar would be more in line with fundamentals. He added that he "would not be surprised" if the yen rose to that level. Meanwhile, some market participants held the opposite view. Jesper Koll, Executive Director of Monex Group, and Calvin Yeoh, an analyst at Blue Edge Advisors, believe that if the Bank of Japan continues to lag behind in the normalization of monetary policy, the USD/JPY exchange rate could even rise to 200 or higher. Yamasaki also warned that the Japanese government's recent lack of intervention in the foreign exchange market should not be interpreted as a lack of willingness to act. He stated that the Japanese Ministry of Finance has issued multiple warnings and demonstrated its willingness to intervene, and yen short positions still face the risk of being forced to close out. Market participants expect the Japanese government may still intervene in the exchange rate in mid-July.
The yen surged unexpectedly, leading to market speculation that Japan's strategy has shifted towards a "surprise attack" approach.
Odaily Odaily reports that the yen suddenly jumped against the dollar on Thursday, with traders on high alert for possible intervention by Japanese authorities to support the currency. It remains unclear what triggered this market volatility or whether Japanese authorities intervened. The magnitude of the movement appears smaller than in previous interventions. Hirofumi Suzuki, chief foreign exchange strategist at Sumitomo Mitsui Banking Corporation, said, "It's unclear at this point whether this constitutes intervention. However, as reported, the authorities may have shifted their intervention strategy and tactics, and may no longer issue intervention signals in advance, which could make further weakening of the yen more difficult." (Jinshi)
South Korea's deputy finance minister said that the country is in close communication with Japan and its allies regarding exchange rate issues.
According to Odaily Odaily, South Korea's Deputy Finance Minister said on Thursday that South Korea is maintaining close communication with Japan and other major allies on foreign exchange issues, and warned that the won's exchange rate has seriously deviated from economic fundamentals. “We have always maintained close cooperation and information exchange with Japan and other relevant countries,” he said when asked whether South Korea would coordinate its exchange rate stabilization policy with Japan. “Currently, the Korean won exchange rate is out of sync with economic fundamentals.” When asked about any potential intervention measures, he declined to elaborate, but stated that the government is prepared to take stabilization measures should insufficient market liquidity lead to excessive exchange rate volatility. (Jinshi)
Sources indicate that foreign exchange transactions related to SK Hynix's US listing are expected to take place around July 15th.
According to Odaily Odaily, a source familiar with the matter said that foreign exchange transactions between the US dollar and the Korean won related to the US listing of South Korean chipmaker SK Hynix are expected to take place around July 15. SK Hynix launched its US stock offering on Monday, planning to raise 43 trillion won (approximately US$28.16 billion), and has already received subscription intentions from major investors for up to US$7 billion. (Jinshi)