USD/JPY Drops to 14 Year Low - Threat of Intervention Looms
The move in USD/JPY below 87 came as Japan's Finance Minister Fujii said he would examine if forex moves are abnormal and that he was watching currency moves for now. Vice Finance Minister Noda said the government isn't considering intervention.
Markets are speculating that Japanese officials would tolerate some further gain in yen as exports are improving as data released earlier this week showed slowest decline in about twelve months.
The Japanese yen also manages to rally against other major currencies, in particular the higher yielders. Yen strength is boosted further by another day of decline in Nikkei and sharp, over 3% fall in Shanghai composite.
BoJ minutes of Oct 30 meeting showed that the bank might reinstate the emergency-lending program after it expires in March. The minutes showed members agree to employ "appropriate measures -- including reutilization of the special funds- supplying operations -- to facilitate corporate financing in a flexible and timely manner." Also the minutes showed members agreed to "maintain the extremely accommodative financial environment by holding interest rates at their current low levels," and provide "ample funds sufficient to meet demand in financial markets."
