Yen Intervention Effect Will Be Limited, ANZ Says

(Corrects size of decline in third paragraph.)

The decline in the yen after Japan unilaterally stepped into markets to weaken the currency may be short-lived, according to Australia & New Zealand Banking Group Ltd. and Standard Chartered Plc.

Japan’s previous attempts to stem gains in the yen haven’t “had any sustained impact,” Richard Yetsenga, ANZ’s global head of foreign-exchange strategy, told Bloomberg Television. Coordinated intervention “will tend to be more effective” but is unlikely, Thomas Harr, head of Asian currency strategy at Standard Chartered in Singapore, said in a phone interview today.

The yen slumped 4.3 percent to 79.20 per dollar as of 12:10 p.m. Tokyo time. The currency reached a postwar record high of 75.35 per dollar earlier today and has advanced against all of its 16 major peers in the past six months.

Yetsenga on Japan’s intervention:

“It’s quite clear that this hasn’t worked before. They’ve even done it in ways which are quite persistent and the volumes have been quite large and it still hasn’t had any sustained impact.”

“Perhaps there’s some effect in terms of changing the short-term positioning in the market, but really what you’re doing is adding up these cases of unsuccessful intervention. Medium term, you just embolden the market and really talk any people out of being short the yen.”

“There’s nothing here which says the yen is the problem for the Japanese economy. There seem to be much more structural drivers when you’re talking about Japan, but yet they keep targeting the yen.”

Harr on yen intervention:

“I think the market will try to sell into this move higher in dollar-yen. I think you’ll see the same market reaction as you’ve seen before. It managed to push up dollar-yen, then it stabilized, then it starts to grind lower again. Can’t see why this time should be anything different.”

Intervention “will tend to be more effective if it’s coordinated, but I don’t think that’s likely.”

“In general, the U.S. and European thinking is one should stay away from the market and let the market set the exchange rate. I don’t think there are enough domestic reasons to see coordinated intervention yet.”

To contact the reporters on this story: Kristine Aquino in Singapore at kaquino1@bloomberg.net; Rishaad Salamat in London at rishaad@bloomberg.net

To contact the editor responsible for this story: Rocky Swift at rswift5@bloomberg.net

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