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USD/JPY: Intervention seems a natural step _10/05/2016

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Overview and Dynamics

After Japan's Finance Minister Taro Aso on Monday for the first time clearly expressed its readiness to implement the intervention in the foreign exchange market by the Bank of Japan, the yen began to rapidly lose ground on the currency market. Aso said that "rapid, due to the speculative activity of change of the yen is undesirable," and the recent rise of the yen "excessive." On Tuesday, during a parliamentary session, Aso reiterated that "intervention appears a natural step"

The Japanese stock index Nikkei Stock Average ended the day in Asia, rising 2.2% to 16565.00 points, while the USD / JPY pair rose to the level of 108.90. At the moment the price in USD / JPY pair has passed the mark of 109.00 and the pair continued growth on concern the Bank of Japan intervention.

Earlier, the yen sharply stronger on BoJ inaction background during its meeting on April 28, when investors were expecting from it a further easing of monetary policy. Earlier, the bank's representatives have repeatedly stated commitment to extra-loose monetary policy. At this time, the bank also did not forget to say is already well-known phrase - "take additional easing measures, if deemed necessary."

However, those "measures" that are expected from the bank market participants were not adopted. As a result, the yen has risen sharply in the foreign exchange market.

Immediately after the announcement of the Bank of Japan's decision pair USD / JPY has fallen to 2.4%, while the yen showed the biggest one-day rise since 24 August 2015. The Japanese stock index Nikkei Stock Average on the basis of trading in Asia fell 3.6% to 16666.05 points. During the two days immediately following the bank's decision pair USD / JPY has lost more than 500 points.

Naturally, such a sharp appreciation of the yen can not but worry the Government of Japan. However, rising above the level of 110.00 dollar sales due to the expected near this mark by Japanese exporters is unlikely.

Tuesday, 10 May, 2016 / 10:54

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