Bank of Japan allegedly intervened in the FX market following a sharp gain against the U.S. Dollar

The Bank of Japan’s Japanese yen has demonstrated strange behavior in the FX market today, raising eyebrows among FX traders. The Japanese yen swung aggressively in today’s market, dipping to a record 34-year low against the American dollar. 

Earlier on Monday, the Yen dipped to a record low of 160.17 against the dollar, recording the lowest trading price since April 1990. Later on, the market took an early turn, as the Japanese yen sharply gained against the dollar, trading at 155.01. The sudden surge in price to level up the trading price has sparked conversations on Twitter, suggesting the possible involvement of the Bank of Japan. 

JUST IN 🚨: Japan's Top Currency Official, Masato Kanda, declined to answer whether the Bank of Japan had intervened in the FX market following a sharp gain against the U.S. Dollar https://t.co/hzEVYK21b6 pic.twitter.com/UqFXe85C6W

— Barchart (@Barchart) April 29, 2024

Amid the claims, several attempts have been made to get comments from Japanese officials about the FX market’s alleged intervention. Earlier today, Japan’s top currency official, Masato Kanda, declined to answer whether the Bank of Japan had intervened in the FX market following a sharp gain against the U.S. dollar. 

Although the Officials in Japan are on a public holiday, many traders feel it’d be decent to comment on the possible intervention of the Bank of Japan.

Bank of Japan’s policy for the Japanese yen. 

Since 2021, the Japanese yen has struggled against the dollar. The Bank of Japan’s monetary policy may have played a part in it. Usually, high-interest rates attract global investors to the local market, while low-interest rates achieve vice versa. 

The Bank of Japan is notoriously known for its mind-blowing low interest rates despite other central banks continuously raising interest rates. As a result, the yen has repeatedly suffered against the dollar. 

As a countermeasure, last month, the Bank of Japan raised the interest rates for the first time in 17 years. The move was a countermeasure to the continually increasing interest rates in the US. 

How the weak yen affect the Japanese people

Well, policy making is an integral part of every central bank, and the Bank of Japan has a unique approach to these policies. The weak yen is beneficial to exporters, who generally rake in more profits. 

On the flip side, citizens also suffer a sharp surge in the price of imported goods and commodities, tightening living conditions. 

The BoJ has been clear about its approach and strong belief in its existing monetary policy. Stating that only in extreme cases of exchange-rate volatility – where the economy is massively affected, would prompt a review of the existing monetary policy. 

Sourced from Twitter