TOKYO — Japanese authorities were silent after a sudden jump in the dollar against the yen Friday that traders initially said was because of the Bank of Japan intervening to weaken the Japanese currency.
In early afternoon trading in Tokyo, the dollar jumpedsuddenly from the mid-84 yen level to as high as 85.38 yen before slipping back to 84.68 yen, prompting traders to say the central bank had bought dollars to weaken the yen.
But no official confirmed the action in the subsequent hours. The Bank of Japan, Finance Ministry and Cabinetall said they could not comment, a departure from last week when Japan intervened in currency markets for the first time in six years.
On Sept. 15, monetary authorities likely spent between $20.7 billion and $21.9 billion to buy the dollar, according to central bank figures. At the time, Finance Minister Yoshihiko Noda openly discussed intervention at a news conference, touting the government’s resolve to fight the strong yen. The central bank released an accompanying statement.
The move followed the dollar’s drop to a 15-year low of 82.87 yen, which led business leaders to press the government for intervention. A strong yen batters Japan’s car and electronics exporters by making their products less competitive in world markets and eroding the value of profits from overseas.
Prime Minister Naoto Kan, who met with President Barack Obama in New York on Thursday, said last week that Japan would “continue to take decisive action if needed” to keep the yen from appreciating.
It was unclear whether that action happened Friday.
Yuji Kawashima, a chiefstrategist at Daiwa Institute of Research, said in the early afternoon that there was an “obvious movement” in exchange rates that he thought signaled that authorities had bought dollars.
But as the day wore on, market opinion shifted toward skepticism. The government stayed mum, and traders at several banks said there was no evidence of the central bank’s apparent transactions on electronic trading systems.
Takuji Okubo, chief economist at Societe Generale in Tokyo, said the general consensus at his company was that intervention probably did not take place.
He said, however, that staying silent could also be a clever move by the Finance Ministry to keep markets guessing. The government has conducted “stealth intervention” in the past.
“I wouldn’t be surprised if they really did intervene today,” Okubo said. “It would have been a nice tactic. People are unsure, and that’s good for [the Finance Ministry].”
If the government continues to sidestep the issue, markets will have to wait until early November to know for certain.
That’s when the Finance Ministry releases a quarterly report with detailed intervention data.
Business, Pages 31 on 09/25/2010