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Fresh money market data from the Bank of Japan (BOJ) suggests Japanese authorities did not step into currency markets on Friday, despite a sharp move in the yen that had reignited speculation of official intervention.
According to BOJ projections released on Monday, the central bank expects a net outflow of 630 billion yen (around $4.09 billion) from money markets on Tuesday. While the figure was larger than what most brokerage houses had anticipated, forecasts ranged from a net inflow of 100 billion yen to an outflow of 300 billion yen, it remained well below the levels typically associated with direct currency intervention.
Analysts said the scale of the projected outflows does not match the footprint left by actual intervention operations.
“The size of the projected treasury-related flows and the net change in current account balances are well below the multi-trillion-yen magnitudes typically associated with decisive intervention once settlement effects appear,” Shoki Omori, chief desk strategist at Mizuho Securities, told Reuters.
He added that the latest yen moves were more likely the result of market positioning and heightened sensitivity to policy signals than the deployment of Japan’s foreign exchange reserves.
“This suggests that the recent sharp moves in the yen were driven mainly by position adjustments, liquidity conditions, and heightened sensitivity to official signalling, rather than by actual reserve deployment,” Omori said.
With inputs from agencies.
According to BOJ projections released on Monday, the central bank expects a net outflow of 630 billion yen (around $4.09 billion) from money markets on Tuesday. While the figure was larger than what most brokerage houses had anticipated, forecasts ranged from a net inflow of 100 billion yen to an outflow of 300 billion yen, it remained well below the levels typically associated with direct currency intervention.
Analysts said the scale of the projected outflows does not match the footprint left by actual intervention operations.
“The size of the projected treasury-related flows and the net change in current account balances are well below the multi-trillion-yen magnitudes typically associated with decisive intervention once settlement effects appear,” Shoki Omori, chief desk strategist at Mizuho Securities, told Reuters.
He added that the latest yen moves were more likely the result of market positioning and heightened sensitivity to policy signals than the deployment of Japan’s foreign exchange reserves.
“This suggests that the recent sharp moves in the yen were driven mainly by position adjustments, liquidity conditions, and heightened sensitivity to official signalling, rather than by actual reserve deployment,” Omori said.
With inputs from agencies.
