Central reserves step in over yen and Swiss franc

SWISS and Japanese authorities are simultaneously threatening to take action to halt their currencies’ appreciations against the greenback.

Japan’s finance minister, Yoshihiko Noda, pledged “bold action” over the weekend if it becomes necessary to anchor down the yen.

Throughout the world investors are seeking refuge from risk amid heightening uncertainty over the global economic outlook and governments’ debt crises.

The yen strengthened to 76.31 to the dollar last Thursday; a similar spike earlier in the month prompted Japanese authorities to intervene, selling the currency.

“Although the Bank of Japan has only recently expanded its asset-purchase scheme, we would not rule out further monetary easing, particularly in combination with government action to reduce the value of the yen,” commented Capital Economics.

The Swiss National Bank (SNB), meanwhile, indicated last week that it could peg its currency to the euro, to prevent further escalation.

The Swiss franc lost ground against the Eurozone’s single currency as a result of the speculation, yet the central bank is still expected to announce some form of intervention this week.