Latest data has revealed that Japan carried out a stealth intervention in November to weaken its currency.The Ministry of Finance revealed Japan sold 1.02 trillion yen against the dollar on the first four days of November in addition to 8.07 trillion yen on October 31st.  There is a good possibility that Finance Minister Jun Azumi will intervene again to weaken the currency, over fears that security-buying investors are weakening the country’s exports.Lee Hardman, a currency strategist at Bank of Tokyo-Mitsubishi UFJ Ltd, in London said: “The yen has weakened modestly, reflecting the increasing risks that the Japanese authorities may intervene again to damp yen strength.“The latest report confirmed as widely expected that the Japanese authorities carried on undertaking stealth intervention to weaken the yen in early November.”The news is unsurprising considering the early rhetoric from Japanese Ministers this year. Exports in the country decreased by 2.7 per cent from 2010 to ¥65.554 trillion. Car exports declined 10.6 per cent and electronic parts by 14.2 per  cent. Recent shifts in trading has been described as a ‘turning point’ by industry experts, with the Bank of Japan ready to take appropriate responses over the declining export demand.The recent crisis in Greece and the uncertainty in Europe has pushed investors towards safer currencies such as the yen. The currency has climbed to post-World War II highs of 75.35 per dollar recently, which has had a significant impact on staple exporters in Japan, such as Sharp Corperation and the Honda Motor Corporation.There were brighter signs in Europe, however, as investors placed more trust in a Greek debt arrangement. Greek prime minister Lucas Papademos met the leaders of the three parties supporting him in an attempt to agree on a second aid package. The single-currency strengthened over optimism regarding a resolution for Greece.
This new confidence, and the promise of state intervention in Japan could lead to a levelling out or even a depreciation in the yen.For more information on foreign exchange treasury services and risk management, visit our Corporate FX sitePublished by Mark Thompson