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Japanese yen jumps against US dollar on suspected intervention

Published

3 weeks ago

April 29, 2024

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Japanese yen jumps against US dollar on suspected intervention

The yen jumped suddenly against the dollar on Monday, with traders citing yen-buying intervention by Japanese authorities to try to underpin a relentless tumble in the currency to levels last seen over three decades ago.

The dollar fell sharply to 155.01 yen from as high as 160.245 earlier in the day. Trade sources said Japanese banks were seen selling dollars for yen. It was last fetching 156.21 yen.

Traders had been on edge for weeks for any signs of action from Tokyo to prop up a currency that has fallen 11 per cent against the dollar so far this year. The yen’s plunge to 34-year lows has come despite a historic exit from negative rates last month as traders bet Japanese rates will remain low for some time.

Japan’s top currency diplomat Masato Kanda declined to comment when asked if authorities had intervened.

Read more: Japanese yen trips past 160 per dollar to April 1990 lows

“I won’t comment now,” Kanda, the vice finance minister for international affairs, told reporters.

Japan’s Ministry of Finance was not immediately available for comment, with markets in the country closed for a holiday on Monday.

“The move has all the hallmarks of an actual BOJ intervention and what better time to do it than on a Japanese public holiday, which means lower liquidity in USD/JPY and more bang for the Bank of Japan’s buck!”, said Tony Sycamore, Sydney-based market analyst at IG.

Bank of Japan Governor Kazuo Ueda told a press conference after a meeting last week that monetary policy does not directly target currency rates, although exchange-rate volatility could have a significant economic impact.

Read more: Powell dashes US rate cut hopes, says current policy needs more time to work

The yen had moved nearly 3.5 yen between 158.445 and 154.97 on Friday as traders vented their disappointment after the Bank of Japan kept policy settings unchanged and offered few clues on reducing its Japanese government bond (JGB) purchases – a move that might have put a floor under the yen.

The yen has been under pressure as US interest rates have climbed and Japan’s have stayed near zero, driving cash out of yen and into dollars to earn so-called “carry”.

Read more: Stocks wobble as interest rates remain the main focus

The suspected intervention comes just days ahead of the Federal Reserve’s May 1 policy review, with investors already anticipating a delay in Fed rate cuts after a batch of sticky US inflation data and as officials including Chair Jerome Powell emphasise even those plans are dependent on data.

Japan intervened in the currency market three times in 2022, selling the dollar to buy yen, first in September and again in October as the yen slid towards 152 to the dollar, a 32-year low at the time. Tokyo is estimated to have spent as much as 9.2 trillion yen ($60.78 billion) defending the currency.

The United States, Japan and South Korea agreed earlier this month to “consult closely” on currency markets in a rare warning and Tokyo has stepped by its rhetoric against excessive yen moves.

The yen has also hit multi-year lows against the euro, Australian dollar and Chinese yuan.

“Today’s move, if it represents intervention by the authorities, is unlikely to be a one-and-done move,” said Nicholas Chia, Asia macro strategist at Standard Chartered Bank in Singapore.

“We can likely expect more follow through from MOF if USD-JPY travels to 160 again. In a sense, the 160-level represents the pain threshold, or new line in the sand for the authorities.”

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Business

Star Entertainment says Hard Rock-led group weighs bid, shares surge

Published

6 hours ago

May 20, 2024

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Star Entertainment says Hard Rock-led group weighs bid, shares surge

Star Entertainment (SGR.AX), opens new tab said on Monday a consortium led by Florida-based Hard Rock Hotels & Casinos is considering a bid for the cash-strapped Australian firm, sending its shares 20% higher.

A potential takeover by entertainment giant Hard Rock would provide a much-needed financial lifeline to Star, which has been plagued by a regulatory inquiry into its flagship Sydney casino operation and an executive exodus.

Star, which had a market value of A$1.29 billion ($863.66 million) as of Monday’s close, said it has been approached by a consortium of investors which includes Hard Rock Hotels & Resorts (Pacific).

The company said it understands Hard Rock Hotels is a local partner of Hard Rock.

Earlier in the day, Star said it had received “inbound interest from a number of external parties” but flagged none of them had yet resulted in “substantive discussions”.

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Business

Red Lobster seeks bankruptcy protection with $100 mln in financing commitments

Published

6 hours ago

May 20, 2024

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Red Lobster seeks bankruptcy protection with $100 mln in financing commitments

U.S.-based restaurant chain Red Lobster has filed for Chapter 11 bankruptcy protection in a Florida court after securing $100 million in financing commitments from its existing lenders, the company said on Sunday.

The company listed its assets and liabilities to be between $1 billion and $10 billion, according to a court filing.

Red Lobster said its restaurants will be open and operate as usual during the bankruptcy proceedings, and plans to reduce its locations as well as pursue a sale of substantially all its assets.

The restaurant chain also said it has entered into a “stalking horse” purchase agreement to sell its business to an entity formed and controlled by its existing term lenders.

“This restructuring is the best path forward for Red Lobster. It allows us to address several financial and operational challenges and emerge stronger and re-focused on our growth,” said Jonathan Tibus, CEO of Red Lobster.

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Business

BMW imported 8,000 vehicles into US with parts from banned Chinese supplier, Senate report says

Published

6 hours ago

May 20, 2024

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BMW imported 8,000 vehicles into US with parts from banned Chinese supplier, Senate report says

German automaker BMW (BMWG.DE), opens new tab imported at least 8,000 Mini Cooper vehicles into the United States with electronic components from a banned Chinese supplier, a U.S. Senate report released on Monday said.

A report by Senate Finance Committee Chairman Ron Wyden’s staff said BMW imported 8,000 Mini Coopers with parts from a Chinese supplier banned under a 2021 law and that BMW continued to import products with the banned parts until at least April.

BMW Group said in an email it had “taken steps to halt the importation of affected products.”

The company will be conducting a service action to replace the specific parts, adding it “has strict standards and policies regarding employment practices, human rights, and working conditions, which all our direct suppliers must follow.”

Congress in 2021 passed the Uyghur Forced Labor Prevention Act (UFLPA) law to strengthen enforcement of laws to prevent the import of goods from China’s Xinjiang region believed to have been produced with forced labor by members of the country’s Uyghur minority group. China denies the allegations.

“Automakers’ self-policing is clearly not doing the job,” Wyden said, urging the Customs and Border Protection agency to “take a number of specific steps to supercharge enforcement and crack down on companies that fuel the shameful use of forced labor in China.” Customs and Border Protection did not immediately comment.

The report found that Bourns Inc, a California-based auto supplier, had sourced components from Sichuan Jingweida Technology Group (JWD). That Chinese company was added to the UFLPA Entity List in December, which means its products are presumed to be made with forced labor.

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