Aug. 4 (Bloomberg) -- Sue Trinh, a currency strategist at Royal Bank of Canada in Hong Kong, comments on the yen after Japanese authorities intervened in foreign-exchange markets today to weaken the currency.
The yen fell 2.5 percent to 79 per dollar as of 1:13 p.m. in Tokyo, after sliding to 79.15, the weakest since July 20. The currency climbed to a postwar high of 76.25 yen on March 17.
Japan’s Finance Minister Yoshihiko Noda “would not say which currencies were bought.
“Nor would he comment on the size of the intervention, but market talk is running in the vicinity of 800 billion yen ($10.1 billion) to 1.2 trillion yen. As a guide, the Japanese portion of the coordinated intervention on March 18 was 692.5 billion yen.
“Yesterday, Noda said 1995 efforts to counter yen rises through both solo and multi-national currency market intervention was a ‘useful reference.’”
On the outlook for the yen:
“Though dollar-yen has a floor for now at the double bottom of 76.25, we continue to think the demand/supply dynamics favor yen gains and this will only change when global rates rise meaningfully, forcing Japanese hedge ratios lower. Recent evidence suggests global rates will be lower for longer.
“Mitigating this somewhat is the poor political backdrop. A July 4 Kyodo News poll showed Prime Minister Kan’s support rating hit 19 percent, an all-time low.”
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