The Japanese currency declined by 1.6 percent last week to 79.66, and has taken a 79.54 average for the year. The market predicts that BOJ will intervene if the currency continues to advance against the dollar. This has come as intervention measures taken in March are seen to have failed to maintain the yen at above 80 yen per dollar. The banks efforts have been hindered by the popularity of the government’s bonds. Companies that have been hard hit by the strong currency include the Sony Corp, Sharp Corp and Panasonic Corp which have resulted to cutting employees and earnings. Japan’s Finance Minister Jun Azumi has called on the central bank to take more action to curb the currency gains.
According to Fredric Neumann, of HSBC Holdings Plc in Hong Kong, the Bank of Japan did not provide enough easing hence the yen did to weaken as expected. Fredric added that the bank’s decision not to intervene in its recent meeting is indicative of its timid approach to the strengthening yen. Masafumi Yamamoto has indicated that despite the simmering speculation of BOJ intervention, the yen will continue to strengthen against the yen. Yamamoto has worked at BOJ for ten years and is currently the Chief Currency Strategist at Barclays Plc in Tokyo.
