Yen Potential to Remain Weak Despite Shadows of Intervention
Although foreign exchange market players remain alert to the possibility of Japanese government intervention to stem currency weakness, the yen is expected to remain vulnerable to weakening in the near term. This view was expressed by Rinto Maruyama, a strategist at SMBC Nikko Securities, who believes the market is beginning to see the risk of the yen strengthening (rebounding) diminishing if authorities remain "silent" at current levels.
According to Maruyama, investor caution regarding the yen's strengthening could fade if the Japanese government fails to signal a firm stance to curb the current yen's weakness. Another contributing risk is growing concerns about fiscal expansion—for example, increased government spending—which could strengthen the market's assumption that the yen will remain on the defensive.
Essentially, despite lingering doubts about intervention, the market is believed to have formed a consensus that USD/JPY is trending upward (the dollar is stronger than the yen). Currently, USD/JPY is hovering around 156.90, indicating that the yen remains under pressure.
Source: Newsmaker.id
