The probability of Japanese intervention

Market Leader informed

As Japanese vice Finance Minister Fumihiko Igarashi claimed yesterday, the currency intervention will be more effective if it’s a surprise for the market. As a result, Japan’s monetary authorities aren’t going to provide any hint on whether they will act or not and if yen, then when it will happen. Finance Minister Yoshihiko Noda himself repeated after the G-20 meeting that Japan remains ready to sell yen.

Yen added more than 15% since the beginning of 2010 harming Japanese exporters – the country’s exports growth pace slowed down declining in September to the lowest level in the year.

Specialists at UBS AG estimate the probability of Japan’s intervention as high. In their view, the nation can justify its actions by the necessity of watching out “the risk of disorderly movements in exchange rates”.
An analyst of FBS brokerage company Elizabeth Belugina notes that there’s now no doubt that the pair USD/JPY will hit the 80.0 level. According to her, the intervention is likely to come if the G20 summit in Seoul on November 11-12 won’t result in concrete measures to combat excessive market volatility in exchange rates. Strategists at Lloyds TSB Bank PLC consider that Japanese intervention may be more successful than the unilateral intervention is commonly expected to be as Japan already has such experience.


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