On Thursday, the dollar reached the symbolic threshold of 150 yen thanks to Treasury rates trading at multi-year highs, keeping markets on high alert for any indications of Japanese government intervention.
With the euro at $0.97835 and the pound at $1.1217, both unable to recoup ground against the dollar after falling the day before, movements among the other major currencies were more subdued. For the first time since August 1990, the brittle yen temporarily fell below 150 per dollar in early European trade. A bit below that level, it was most recently trading flat. As of Wednesday’s closing, it had lost 11 consecutive sessions and had already re-entered 32-year lows six times.
Yen Might Need an Intervention
Sim Moh Siong, a currency analyst at the Bank of Singapore, said that a significant psychological level could need intervention. The intervention has been expected for some time. People will take a moment to peek over their shoulders to see whether there has been any activity; if not, they will push it higher and further. It works like that in the market. He anticipates that the level of 153 would be the next obstacle.
To support the damaged currency, Japan participated in the foreign exchange market this month by purchasing the yen for the first time since 1998. The central bank of Japan has been interfering in the markets to keep Japanese benchmark rates at or near zero when they are increasing abroad, which has resulted in a decline in the value of the yen.
The two-year Treasury rates reached a 15-year high of 4.6079% on Thursday, while the benchmark 10-year Treasury yield increased to 4.18%, its highest level since mid-2008. As the Federal Reserve appears poised to keep up its aggressive pace of interest rate rises, U.S. rates have increased.