Sakakihara British capital: If the devaluation exceeds 130, intervention is required, and it is harder to prevent depreciation than to increase

The yen has been depreciating sharply recently, and once fell below 125 on the 28th (that is, the dollar rose above 125 against the yen), hitting a new low in 6 years and 7 months. And the former Japanese financial officer Sakakihara Hideo, known as “Mr. Yen”, said that under the current yen exchange rate, the Japanese government/Bank of Japan (BoJ, BOJ) does not need to take any policy response, but if the yen falls below 130, then, We must intervene, but it will be more difficult to stop the decline than to stop the rise.

According to a Reuters report, former Japanese Finance Minister Eiko Sakakihara, known as “Mr. Yen”, said in an exclusive interview on the 28th that the current exchange rate level of around 123 yen per US dollar does not require any policy response by the Japanese government/BoJ. However, if the yen falls below 130 (USD/JPY rises above 130), measures such as intervention or monetary policy adjustments must be carried out. Sakakihara said intervention to prevent the yen from falling would be more difficult than preventing the yen from rising.

Regarding the current depreciation tendency of the yen, Sakakihara said, “It is good for Japan’s exports, but for imports, although it will lead to higher costs, but because Japan is currently in deflation, although there are some voices worried about inflation. , but the current depreciation of the yen will not make Japan’s economy suddenly worse.”

Regarding the forecast of the future trend of the yen, Sakakihara Ying Capital pointed out, “The main view of the market is that during 2022-2023, it will fall in the range of around 130, and if the yen falls to 130 or 135, it will become a problem.” It is necessary to intervene or adjust the monetary policy of the Bank of Japan to respond. For example, the Bank of Japan can raise interest rates.

Sakakihara said that to stop the yen’s depreciation, it would need to use the foreign exchange reserves that Japan has, but there are limits to the amount of dollars that can be sold, so it will be more difficult than an intervention to stop the yen from rising.

USD/JPY surged by 1.38% to 123.85 on March 28 (that is, the yen depreciated violently), and rose to a high of 125.10 during the session, which was the first time since August 2015 that it exceeded the 125 level, a record for about 6 years and 7 months (2015 August 12, 2008) new high.

As of 13:12 on the 29th, Taipei time, the dollar was at 123.38 against the yen, and the dollar has surged more than 7% against the yen so far this year.

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