Emergency BOJ meeting next week: Reuters
Reuters piles on the talk that there will be an emergency BOJ meeting next week when the Governor returns from the Jackson Hole conference.
Increasing the size of the supply of JPY loans to the market at 0.1%, presently capped at JPY 20 trln is the most likely route the BOJ will follow, the article says, as have many analysts this week.
In my view, the MOF will follow up with intervention. They’ve been threatening for some time and the sitting PM is on thin political ice, so they have little to lose from a political stand-point. From a market standpoint they could lose a lot if they are unsuccessful. (see the Swiss National Bank for details…).
Chicago specs are long 8 jpy contracts for every one they are short, according to the latest COT data, so I think intervention has a better than average chance of putting the fear of god into traders…
fxgalai: the following is worth reading. If what being metioned there is the case then the US is likely to back up Japanese intervention for the yen as it will spur the demand for the US assets.
http://www.investingcontrarian.com/index.php/financial-news-network/is-the-japanese-surge-into-foreign-securities-an-indication-of-imminent-fx-intervention/
I tend to think the MoF will not intervene in the currency markets, because they and everyone with a clue knows that it will be futile. But like Jamie says the reason to do so would at this point be political. Kan and his team could say “hey look we did it” to the corporates and the public, even though they know that it will fail and it’ll probably cost them some tens of trillions of yen. But it may buy them the time and political collaterla they need to try to keep Kan in power over the crook Ozawa, who is challenging him in the DPJ’s September 14 party head election.
However, intervention or not, I expect there will be massive USD selling from big players between 87.50 and 88.50, and I plan to join that myself if the USD does indeed strengthen for whatever reason next week. If any MoF intervention could push USD/JPY to a close above 90 then I will concede both defeat and surprise.
On the other hand, Kan may roll out some other type of action plan early next week, instead of currency intervention. Economic stimulus etc aimed at boosting stocks and consumer spending. (And the silly side of me thinks Kan might immediately roll back the fx leverage restrictions on yen selling only to see if it helps with his goal of weakening the yen)
Guess they have learnt the lesson….
And what about the loans that can be repaied at such low levels and that were taken 2 – 3 years ago around 120?
That’s huge money the BoJ made
Would expect a run off and big buy of the chf again? Like last week?
Ohhh noooo.
Well you gotta hope they get the ‘urry up with it, or else Gerry’s in danger of freezin’ his todger