By Leika Kihara TOKYO (Reuters) - Japanese authorities are facing renewed pressure to combat a sustained depreciation in the yen, as investors eye ...
NS fans turn up for Crosby's homecoming | SaltWireTOKYO - Japanese authorities are facing renewed pressure to combat a sustained depreciation in the yen, as investors eye prospects of higher-for-longer U.S. interest rates while the Bank of Japan remains wedded to its super low interest rate policy.
But yen weakness is now seen as problematic, with Japanese firms having shifted production overseas and the economy heavily reliant on imports for goods ranging from fuel and raw materials to machinery parts.When Japanese authorities escalate their verbal warnings to say they"stand ready to act decisively" against speculative moves, that is a sign intervention may be imminent.
By staying mum, authorities can keep investors guessing and discourage speculators from testing the yen's new lows - a tactic known as"stealth intervention." While inflation remains above the BOJ's 2% target, public pressure has declined as fuel and global commodity prices have fallen from last year's peaks.
To support the yen, however, the authorities must tap Japan's foreign reserves for dollars to sell for yen.
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