At the end of last month, the JPY fell to a 34-year low at 160 against the USD before rebounding sharply. The Ministry of Finance, responsible for exchange rate policy in Japan, appears to have instructed the Bank of Japan to sell greenbacks from its USD1 trillion of FX reserves on April 29 and again on May 2 to stop the JPY weakening further.
Though officials have not confirmed yet whether Tokyo did act to defend the JPY, the consensus amongst investors, analysts and financial journalists, claims intervention to support the currency will be futile.
However, Bank of Singapore’s Chief Economist, Mansoor Mohi-uddin, disagrees with this consensus, believing that Tokyo’s actions may be an important turning point for the JPY.
