August 15, 2023 (MLN): Japan’s currency (JPY) fell to a level that prompted the first intervention to buy yen by the Ministry of Finance in 1998.
The JPY/USD is currently trading at 145.48 per dollar, down 0.34% in the week, 2.20% month-to-date, and 9.87% year-to-date.
To note, on September 22, 2022, the Ministry of Finance bought ¥2.84 trillion ($19.5 billion) worth of yen when it dropped to 145.90.
JPY has lost about 3% of its value against the US Dollar since the Bank of Japan (BOJ) decided to conduct yield curve control scheme (YCC) with 'greater flexibility' on July 28, 2023, with Governor Kazuo Ueda saying that volatility in the foreign-exchange market was a factor for this decision.
With this move, BOJ is slowly shifting away from decades of massive monetary stimulus on Friday as inflation and economic growth picked up, allowing the country's interest rates to move more freely.
Yield differentials between Japan and other major economies have widened further since then, putting even more pressure on the yen to weaken despite the BOJ’s move.
