Japanese Yen: Intervention doubts as flows favor US Dollar – BNY
BNY’s Wee Khoon Chong highlights that institutional investors bought Dollar and sold Japanese Yen after the June BoJ hike, and again following late-July joint intervention to weaken USD/JPY. Despite official action, real money treated the move as a USD/JPY buying opportunity. Chong questions the durability of FX interventions as USD/JPY trades lower with long-end JGB yields elevated.
Investors fade joint FX intervention
"On June 17, despite a widely anticipated BoJ rate hike, institutional investors poured into USD and sold JPY due to the hawkish interpretation of new Fed Chair Kevin Warsh’s first meeting at the helm of the FOMC."
"Fast forward to the end of July, when joint intervention between the U.S. and Japan was aimed at weakening the USD/JPY cross."
"Despite the move, real money bought USD and sold yen, perhaps indicating the perception of a USD/JPY buying opportunity."
"With the yen having weakened since July 31, and observing the behavior of institutional investors, that begs the question of whether these interventions have any durable efficacy."
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