Yen under pressure after Japan's verbal warning
On Tuesday, the Japanese yen suffered heavy losses, being thrown back from its recent high as a result of recent BOJ’s warnings as for its readiness to weaken the national currency.
The greenback surged approximately 0.4% to a 12-day peak of 108.795 yen, right after growing more than 1% on Monday. The major American currency has slumped to its 18-month minimum of 105.55 yen last week after the BOJ refused to change its monetary policy.
In the wake of the yen’s soar, the country’s finance minister Taro Aso told that Tokyo is about to intervene to weaken the national currency if it dares to soar too high hurting the country’s economy and trade. On Tuesday, Aso reiterated that message.
On Monday, the greenback/yen currency pair remained quite passive when Aso issued his comments during Asia trade. However, the minister’s warning had a powerful yen-weakening effect later in the day during the European as well as North American trading hours.
In fact, for domestic market participants Aso’s comments didn’t appear to be a big surprise. Nevertheless, foreign players might take his words even literally.