Yen jumps as traders bet on Japan interest rate rises

{"text":[[{"start":9.84,"text":"The Japanese yen strengthened sharply on Thursday as traders watched for signs of intervention and increased their bets on more aggressive rate rises by the central bank this year."}],[{"start":20.28,"text":"Japan also successfully sold a tranche of 30-year government bonds, helping to ease investor fears after a sell-off this week in global bond markets that had pushed big economies’ borrowing costs to their highest in years."}],[{"start":33.88,"text":"The yen and Japanese government bonds are being closely watched by investors as concerns grow over plans by Prime Minister Sanae Takaichi to increase public spending and the selling pressure that its bond sell-off is putting on other markets."}],[{"start":47.84,"text":"The currency jumped by 1.3 per cent on Thursday to ¥156.59 to the US dollar, building on a 0.9 per cent gain on Wednesday, with investors on high alert for evidence that Japanese authorities were intervening in foreign exchange markets once again."}],[{"start":64.68,"text":"The move by the yen was broad based, with the currency also rallying against the euro and the British pound."}],[{"start":null,"text":"

"}],[{"start":70.68,"text":"A rare joint intervention by Japanese and US authorities in July and August had significantly boosted the yen’s value to about ¥155, but it had given up much of those gains to trade at about ¥160 in recent days."}],[{"start":85.2,"text":"On Thursday, some analysts suggested the moves could be a sign of further intervention by Japan’s Ministry of Finance, which conducts currency interventions."}],[{"start":93.64,"text":"“I think the MoF has drawn a line in the sand at ¥160,” said Van Luu, global head of solutions strategy at Russell Investments."}],[{"start":102.64,"text":"But others said it was possible the market was simply reflecting the increased possibility of rate rises by the Bank of Japan this year, and of a greater repatriation of capital by domestic investors. The MoF declined to comment."}],[{"start":116.1,"text":"The strengthening came a day after Hajime Takata, a hawkish member of the BoJ’s policy board, said that “2026 represents the start of a new phase, in which rate hikes will not be carried out at a fixed pace but will instead be conducted in a nimble manner”."}],[{"start":131.6,"text":"Analysts at Scotiabank said the comments “hinted to the possibility of tightening in increments greater than the [quarter point] adjustments typically delivered by central banks”."}],[{"start":140,"text":"BoJ governor Kazuo Ueda said on the same day that the central bank would now discuss interest rates at all forthcoming meetings, in a signal that increases are possible at any time."}],[{"start":151.92,"text":"Traders are now pricing a roughly 25 per cent chance that the BoJ speeds up its rate rises and increases its benchmark rate by a quarter point at both its September and October meetings, according to levels implied by swaps markets."}],[{"start":165.08,"text":"Broader bond markets edged higher on Thursday, pushing borrowing costs lower for major economies, as weakening oil prices tempered inflation fears. Ten-year gilt yields were 0.04 percentage points lower in early trading at 5.19 per cent, down from an 18-year high set on Wednesday."}],[{"start":183.4,"text":"In recent days, markets have responded to a steady flow of reports from Asheville, where G20 financial leaders met and where US Treasury secretary Scott Bessent reportedly raised pressure on the BoJ to raise rates."}],[{"start":196.28,"text":"The tone of Bessent’s public comments on the matter has also intensified. Earlier in the week he told CNBC: “It’s my belief that the Japanese government and that the BoJ will do the things that will lead to a stronger yen.”"}],[{"start":208.32,"text":"Analysts also pointed to a recent meeting of Japan’s pension fund, the GPIF. The meeting, held in August according to a statement released on Monday, followed finance minister Satsuki Katayama’s suggestion in July that the GPIF might increase its investment in domestic assets. It was the first management committee meeting held in August since 2019, when the GPIF was reviewing its strategic asset allocation, according to Mizuho."}],[{"start":233.24,"text":"“The GPIF meeting was unusual as they do not normally conduct them in August, during the holiday period . . . and it has prompted speculation that they might have been discussing the target portfolio,” said Yujiro Goto, chief foreign exchange strategist at Nomura."}],[{"start":246.84,"text":"The move in the yen also came as Japan successfully sold 30-year government debt at an average yield of just over 4 per cent, in an auction that showed slightly weaker demand than the previous sale."}],[{"start":258.28,"text":"Some analysts say successful auctions could indicate that big Japanese financial institutions, such as life insurers, are ready to start increasing the amount of capital they invest at home."}],[{"start":268.32,"text":"Earlier this week, the Japanese 10-year bond yield reached 3 per cent, its highest level since 1996, as global long-dated debt sold off. It has since fallen back slightly below that key threshold."}],[{"start":280.88,"text":"Lee Hardman, senior currency analyst at MUFG, said expectations for faster BoJ rate rises and speculation over a GPIF allocation shift were helping to strengthen the yen."}],[{"start":291.92,"text":"“If both materialise, it would give us more confidence that the yen can stage a more sustained rebound going forward,” he added."}],[{"start":303.25,"text":""}]],"url":"https://audio.ftcn.net.cn/album/a_1788428648_5359.mp3"}