Yen rebounds as BOJ’s Kuroda uses talk to signal frustration

Bloomberg

The yen rebounded as traders mulled comments from Bank of Japan Governor Haruhiko Kuroda on the currency’s decline amid a broad dollar selloff.
The dollar-yen pair fell 1.3% to around the 142.20 level, after climbing for four straight sessions. Kuroda held a meeting with Prime Minister Fumio Kishida in a sign of the nation’s heightened alert levels.
“Sudden moves in foreign exchange rates increase uncertainty for firms and are undesirable,” Kuroda told reporters after the first gathering of the two since June.
“A two to three yen move against the dollar in a single day is very sudden.”
Kuroda’s comments follow the three-party meeting that sought to communicate a sharp ramping up of concern from officials, who gave their strongest hint yet that direct currency intervention was among the options available to them.
That message continued, when Chief Cabinet Secretary Hirokazu Matsuno reiterated his stance that the recent moves in the yen were excessive and all options remained on the table.
Japan’s acute policy divergence on interest rates with the Federal Reserve has piled pressure on the yen this year, causing it to slump some 20%. While other central banks, including the European Central Bank, are racing to raise rates, the BOJ is keeping them at rock-bottom levels.
“Markets likely took Kuroda’s comments as an opportune trigger to unwind stretched positions, particularly since hawkish ECB messaging reminded markets that the hawkish Fed is not the only game in town,” said Yanxi Tan, foreign exchange strategist at Malayan Banking Bhd in Singapore.
“The extent of USD/JPY move today is roughly on par with that in broader dollar softening.”