WORLD FOREX: Japan Intervention Keeps Dollar At Y79.20

Monday, Oct 31, 2011

-- Japan intervention seen continuing, pinning dollar at Y79.20

-- Focus now is whether Japan will continue operation in London, New York markets


 
   By Takashi Mochizuki 
   Of DOW JONES NEWSWIRES

TOKYO (Dow Jones)--The dollar was pinned at Y79.20 for most of Asian trading on Monday as Japan's Ministry of Finance was seen aggressively swallowing dollar-selling orders by short-term-focused investors and Japanese exporters.

Earlier in the day, Finance Minister Jun Azumi confirmed that Tokyo started its latest intervention campaign at 0125 GMT, and dealers said the authorities were still actively buying dollars in afternoon trading.

After hitting a session high at Y79.55, the greenback stayed at Y79.20 from 0240 GMT. It was at Y75.65 before the intervention.

"You see the line is flat in the dollar/yen EBS chart but that's not because the system is broken," a senior dealer at a major Japanese bank said. In fact, the flow of dollar/yen trading is well over five times larger than average, according to data from EBS.

Short-term-focused speculators and Japanese exporters were selling the dollar, the senior dealer said, adding "the fact the greenback isn't falling despite these orders means someone has been there to buy the U.S. unit at Y79.20."

Tokyo traders said the authority's intervention has been very powerful and that the total amount of the operation is seen to have exceeded August's Y4.5 trillion, reaching Y6 trillion for a record-high figure.

Credit Suisse chief currency strategist Koji Fukaya said the timing of the intervention was surprising and it is likely that the effect of the latest campaign will last longer than it did in August.

Looking ahead, investors will pay attention to whether Japan will keep intervening in the market in London and New York later in the global day, and in Tokyo on Tuesday, said Okasan Securities senior dealer Tsutomu Soma.

Another focus will be a Federal Open Market Committee meeting later this week, said Nomura Trust and Banking senior dealer Hideki Amikura. He said if the Fed takes additional easing actions and shares fail to rise much, the dollar may resume falling despite Japan's efforts.

As of 0550 GMT, the dollar was at Y79.20, almost unchanged from Y79.21 at 0305 GMT. The euro was at Y110.94 and $1.3993 while the ICE Dollar Index, which tracks the U.S. dollar against a basket of currencies, was at 76.227.


 
Interbank Foreign Exchange Rates At 0150 EST / 0550 GMT 
 
                         Latest         Previous  %Chg    Daily    Daily   %Chg 
                                        2150 GMT           High     Low    12/31 
Dollar Rates 
 
USD/JPY Japan            79.19-20       75.64-66  +4.69    79.55    75.58  -2.37 
EUR/USD Euro            1.4009-12      1.4135-50  -0.93   1.4170   1.3988  +4.63 
GBP/USD U.K.            1.5981-86      1.6120-34  -0.89   1.6133   1.5968  +2.41 
USD/CHF Switzerland     0.8724-28      0.8620-36  +1.14   0.8737   0.8612  -6.67 
USD/CAD Canada          1.0014-18      0.9919-22  +0.96   1.0026   0.9917  +0.69 
AUD/USD Australia       1.0534-38      1.0710-14  -1.64   1.0712   1.0508  +2.95 
NZD/USD New Zealand     0.8104-10      0.8226-30  -1.47   0.8227   0.8080  +3.98 
 
Euro Rates 
 
EUR/JPY Japan           110.94-98      106.89-07  +3.72   111.53   107.02  +2.14