FOREIGN exchange traders will be closely watching the yen’s movement today following the G7’s dramatic intervention to stem the currency’s gains late last week.
Traders are on alert for further central bank moves to ease any runaway increases in the yen, which if left unchecked would make Japan’s exports more expensive and put further pressure on its economy.
Friday’s move by the G7, in which the countries poured in an estimated $25bn, was the first joint intervention in currency markets since the G7 came to the aid of the newly launched euro in 2000.
Some analysts feared that a massive repatriation of Japanese money to pay for the repairs needed would put upward pressure on the yen.
Meanwhile, Societe Generale analysts said in a note yesterday they were confident in the Japanese economy’s eventual recovery.
“We still find the most likely outcome to be a V-shaped profile with the upcoming data seeing a very sharp decline followed by a sharp acceleration as reconstruction and the replacement of consumer durables gets on the way,” they said.
Tokyo’s markets remain closed for a holiday today.