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Deutsche Doubtful That Intervention Will Work

JPY

Deutsche Bank believe that Japan’s intervention in JPY is unlikely to work.

  • They note that “while this may help reduce some speculative positioning over the next few days, we are highly doubtful this will work in turning the yen trend,” highlighting several points:
  • “Intervention to strengthen the currency is at direct odds with Bank of Japan policy.”
  • “The amounts required to intervene could become prohibitively costly very quickly.”
  • “Intervention has not worked in the past.”
  • They conclude with “the bottom line is that for the JPY to start strengthening either the global dollar positive environment needs to turn or the Bank of Japan needs to abandon YCC. Both the FOMC and BoJ meetings made announcements in favour of USD/JPY moving higher. As long as this persists, we worry intervention will just lead to an unnecessary loss of reserves and credibility.”
MNI London Bureau | +44 0203-865-3809 | anthony.barton@marketnews.com
MNI London Bureau | +44 0203-865-3809 | anthony.barton@marketnews.com

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