Japan faces a tough tug-of-war with yen bears

Singapore, May. 3 (BNA): Japan appears to have bought some time and respite for a tumbling yen through its latest bursts of suspected interventions, yet it has also set itself up for a protracted war with a market that views the currency as a compelling sell, analysts say.

Traders estimate the Bank of Japan (BOJ) spent nearly $59 billion defending the currency this week, helping to put the yen on track for its best weekly performance in over a year, Reuters reported.

The Japanese currency is up 5% from the 34-year low of 160.245 it plumbed on Monday. Tokyo is yet to confirm it had intervened.

But this week’s rally has been anything but linear in a market decidedly bearish on the currency, given the massive gap between its ultra-low yields and those in other major economies.

The yen has swung wildly during the suspected intervention bouts, gaining nearly 5 yen in a matter of minutes and relinquishing part of that speedily.

The yen was then near 152 per dollar, but within two months of that intervention it was sliding again. It had shed 20% more of its value against the greenback when it hit 1990 lows this week.

ZH