In Japan, the yen strengthened to ¥153.6 per US dollar on September 8. During morning Asian trading, the currency quickly entered the ¥153 range and held at that level. As of around 10:00 a.m. Tokyo time, the yen was at its strongest since February 18, The Japan Times reports.
Exchange rate movement at the beginning of September
The strengthening of the Japanese currency began on September 2. Some analysts downplay the likelihood that the current exchange-rate movement resulted from intervention: in their view, the yen is not appreciating quickly enough to indicate official currency purchases.
According to analysts, the yen’s strengthening is likely linked to expectations that Japan will act more decisively to halt its weakening after pressure from the United States. On Monday, US stock exchanges, the bond market and banks were closed for Labor Day in the United States.
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Expectations regarding the Bank of Japan
Investors and traders expect a more hawkish stance from the Bank of Japan. According to Totan ICAP, the market priced the probability of the Japanese central bank raising its rate next week at 99%. Expectations have also strengthened that the regulator will raise the rate twice by the end of the year.
After breaking through the ¥155-per-dollar mark, some analysts suggest that the trend of yen weakening may have been interrupted and that the currency will remain relatively strong going forward. At the end of July, the yen traded at nearly ¥164 per dollar, a level not seen in 40 years. After coordinated intervention by the United States and Japan, the yen strengthened to about ¥155 per dollar, but the exchange rate later returned to around ¥160 per dollar. The new strengthening began in early September.
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