The intervention alarm is getting louder! Yen bears dare not "act recklessly"

Although the yen continues to depreciate,Fearing that the threat of Japanese intervention will come true, yen bears are still hesitant to act recklesslyThe dollar is in its narrowest monthly trading range against the yen in a year and a half.

Although the dollar hit a 10-month high against the yen earlier on Monday,The gap between the dollar's highest and lowest points against the yen in September was only 2.8%.In July, the Bank of Japan unexpectedly adjusted its YCC policy, when the range nearly doubled from September to 5.6%.

On Monday, the dollar was trading near 148.50 against the yen in European trading, approaching the psychologically important level of 150. Although the huge interest rate difference between Japan and the United States has pushed the yen downThe repeated warnings by Japanese government officials have deterred the yen bears from continuing their aggressive shortingKaoru Shoji, strategist at SMBC Nikko Securities Inc., said:

DBG Forex"The yen is approaching last year's peak, so in that sense, traders are becoming more wary of intervention, and the market is trying to figure out how weak the yen is before the authorities intervene," he said.

On Friday, the Bank of Japan kept its negative interest rate and YCC policies unchanged. Bank of Japan Governor Kazuo Ueda said the background had not changed much, dispelling speculation that the central bank would exit negative interest rates by the end of the year.

Mr. Ueda's comments on Monday also failed to have any immediate visible impact on the yen, saying there was a lot of uncertainty about the sustainability of wages and inflation, soAchieving the Bank of Japan's 2% inflation target and achieving wage growth at the same time "has not yet occurred"。

Due to the policy of the Bank of Japan,The implied rate of return on the yen is below zeroIt has become the preferred source of funds for investors to buy high-yielding currencies. According to the latest data from the US Commodity Futures Trading Commission (CFTC),Hedge funds and asset managers both held net short positions in the yen last week。

Fumio Kishida, Japan's prime minister, said last week that his country would remain highly vigilant and take necessary action against excessive exchange rate movements. Makoto Kanda, Japan's top exchange rate official at the finance ministry, said he was in close contact with his US counterpart, adding that both sides agreed that excessive exchange rate movements were unwelcome.

National Australia Bank Ltd. strategists led by Ray Attrill wrote in a research note on Monday:

"If the Bank of Japan and the Ministry of Finance agree that they do not want to see further dollar appreciation against the yen, a new round of intervention is increasingly likely, an action designed to buy more time before the conditions for the BoJ's policy shift are confirmed."