Stop the depreciation of the yen on Governor Ueda's shoulders! Watch today's Bank of Japan press conference closely, and if you follow the same path as last year, it will accelerate

After the US Federal Open Market Committee (FOMC) on the 20th, the dollar rose due to prolonged observations of US financial tightening, and the yen fell to the middle of the 148 yen range at 1 time. Ahead of the Bank of Japan decision meeting on the 22nd and President Kazuo Ueda's press conference, in addition to the prospect of canceling the negative interest rate policy suggested in an interview with the Yomiuri Shimbun, there is growing interest in the presence or absence of exchange intervention.

Since the 19th, statements affirming exchange intervention have been made one after another from US Treasury Secretary Yellen and Treasurer Kanda of the Ministry of Finance, etc., which reminds me of last year's intervention drama. At the press conference after the Bank of Japan meeting on 9/22 last year, Governor Kuroda Haruhiko (then) expressed a negative opinion on the immediate interest rate hike while emphasizing mitigation, and the exchange rate rose to 1 dollar = 145 yen 90 yen during the press conference. On the evening of the same day, a yen buy/dollar sale intervention was carried out for the first time in 24 years. The amount of intervention amounted to 2,838.2 billion yen. Nevertheless, the depreciation of the yen progressed to 151 yen 94 yen on 10/21 of the same year.

At the press conference on the 22nd, if there is a negative attitude towards policy revisions or exchange rate intervention in Governor Ueda's remarks, it is not strange if the depreciation of the yen accelerates further. There are also voices saying, “The market is incorporating policy revisions too far forward, and if the Bank of Japan does not move, it is easy for yen depreciation” (Daisaku Ueno, Chief Exchange Strategist, Mitsubishi UFJ Morgan Stanley Securities, Nihon Keizai Shimbun).

In response to the Bloomberg interview, Ueda Marito, director of the financial market research department of SBI Liquidity Market, expressed the view that “while interest rate differences between the United States and major countries move in the direction of expansion and the dollar appreciates, yen in particular will become cheaper”.

Also, Mr. Itsuo Toshima, the representative of Toshima & Associates, said in a column in the Nihon Keizai Shimbun dated 20th, “Even if the yen appreciates and the dollar depreciates to around 140 yen due to intervention, the trend of widening interest rate differences between Japan and the US will not change, and the wave of yen sales is likely to recur. There are signs that the wave of yen sales will be longer than last year.” It predicts a deep-seated trend of depreciation of the yen.

Source: Nihon Keizai Shimbun, Bloomberg, Moomoo