Photo by Mr. Wabu
Weakening risk appetite is helping to attract investors to the Japanese Yen pushing the USD/JPY to its lowest point in almost a month.
Although the strength is attracting attention the Japanese government is not ready to intervene again. Yoshihiko Noda, Finance Minister, said the situation that has pushed the Yen higher is the same as the March 18 movement, which prompted G7 nations to intervene in the market and sell the Yen.
Noda is currently in Hanoi for the next few days to meet with his counterparts in the Association Southeast Asian Nations Plus Three. Following the meeting, Noda spoke with reporters and said he is closely monitoring the situation. When asked if the government would intervene in the foreign exchange market again, he said that he wouldn’t comment on “hypothetical situations.”
On May 5, USD/JPY broke below a significant psychological area 80.000 and hit a low of 79.565. The U.S. dollar managed a modest recovery by the end of the day but is still hovering around the 80.000 level.
Although rumors continue to circulate that the Japanese government will intervene, some analysts are not paying much attention. Although the Yen has gained strength in the last few days, sell-off in currency pair has not created any panic in the marketplace.
Eric Theoret, currency strategist at Scotia Capital, said in a research note that the sell-off would have to pick up more momentum before he would expect the government or the G7 to jump back into the market.
“The Japanese yen remains steadily net bought on balance amid the general pullback in risk appetite,” said Michael Woolfolk, analyst from the Bank of New York Mellon.