US Dollar Falls to 155 Yen, Japan-US Opens Opportunity for Intervention Again

JAKARTA - The US dollar fell sharply against the yen in Monday's trade. The US currency briefly touched 155.20 yen after Japan and the United States admitted coordinated yen purchases last weekend.

Kyodo News, quoted on Monday, August 3, reported that the US dollar had fallen to below 155 yen from above 157 yen. Pressure emerged after Tokyo and Washington warned of possible further intervention.

Foreign exchange intervention is a step for the authorities to buy or sell currencies to hold too sharp exchange rate movements.

At 17:00, the US dollar was at 156.76-156.78 yen. The position was compared to 157.33-157.43 yen in New York and 160.20-160.22 yen in Tokyo on Friday afternoon.

The US dollar has weakened by more than 8 yen in the past week. This level is the weakest since the beginning of May.

The euro was at 1.1526-1.1527 dollars and 180.69-180.73 yen at 1700 GMT. On Friday afternoon in Tokyo, the euro was at 1.1514-1.1515 dollars and 184.46-184.50 yen.

In the bond market, the yield on Japanese government bonds with a 10-year tenor rose 0.025 percentage points to 2.820 percent.

Yield is the rate of return that investors demand from bonds. If bond prices fall, yields usually rise.

The rise in yields comes as speculation about a Bank of Japan or BOJ rate hike has strengthened after a coordinated Japanese-US currency intervention.

The US dollar was trading narrowly in the afternoon trading in Tokyo, mostly at the 156 yen level. A number of market participants suspect that further intervention has been carried out at the start of trading.

Japanese Finance Minister Satsuki Katayama declined to comment on whether any other intervention was made on Monday.

Previously, Tokyo and Washington said they had carried out joint market interventions on Friday. It was the first joint intervention by the two countries in 15 years.

Atsushi Mimura, Japan's Deputy Minister of Finance for International Affairs, said Japan would continue to take steps to curb excessive volatility in the yen.

Volatility is a condition when the price or value moves sharply up and down in a short time.

Mimura called the latest intervention a complete form of the Japan-US currency alliance. He said the two countries would continue to respond without losing momentum.

Katayama also stressed that Japan and the US would not hesitate to carry out further joint interventions.

Takuya Kanda, senior researcher at the Gaitame.com Research Institute, assessed that intervention was only a quick solution or a way to buy time.

"Interventions are nothing but quick fixes, or a way to buy time, and coordinated interventions are a way to make the impact last longer," Kanda said.

The strengthening of the yen also pressured the Tokyo stock market. The Nikkei index fell more than 2 percent as investors feared a surge in the yen could disrupt companies' business prospects.

The Nikkei Stock Average, which contains 225 stocks, closed down 607.12 points or 0.94 percent to 63,754.90. The broader Topix index fell 43.27 points or 1.08 percent to 3,960.03.

In the Prime Market, the biggest pressure came from real estate, transportation equipment, and land transportation stocks.

Kyodo News noted that Tokyo stocks cut losses in afternoon trading after some AI-related stocks and semiconductors were re-bought by investors.

One of them is Kioxia, which reported strong demand for semiconductor memory in its financial report.

"The basic trend of companies benefiting from AI market expansion is unchanged," said Wataru Akiyama, strategist at Nomura Securities Co's Investment Content Department.