2024-05-02 09:55

TOKYO, May 2 (Reuters) - Japanese officials may have spent some 3.66 trillion yen ($23.59 billion) on Wednesday in the latest attempt to pull the yen back from near 34-year lows, Bank of Japan data showed on Thursday. Japan's Ministry of Finance may have spent around 6 trillion yen intervening in the market on Monday to prop up the Japanese currency after it dropped to 160.245 per dollar for the first time since April 1990, the data showed. On Wednesday, the yen was trading at around 157.55 per dollar when it suddenly spiked, strengthening as far as 153 over the following half hour. The Ministry of Finance each time declined to say whether or not it was behind the yen rallies, only repeating its readiness to step in at any time to stem disorderly moves. Currency trades take two business days to settle, and Japan's markets are closed for public holidays on May 6 and May 7. The central bank's projection for money market conditions on May 8 indicates a 4.36 trillion yen net receipt of funds, compared with a 700 billion-1.1 trillion yen estimate from money market brokerages that excludes intervention. "This is a very large sum in a short period of time," said Shoki Omori, chief Japan desk strategist at Mizuho Securities, referring to the two rounds of apparent intervention this week. "Now that the MOF has spent roughly 9 trillion yen, it is going to be less easy for them to intervene if the U.S. payrolls or other data come out strong," providing more momentum for dollar buying, he said. "MOF is getting pushed into a corner." Despite the yen's sudden steep rallies, it remains down some 10% against the dollar so far this year, and was last changing hands at 155.22. The speed with which the yen has resumed its decline despite such large scale buying shows how difficult it is to stem the downward momentum. Analysts point to the gaping gap between Japanese and U.S. government debt yields as the force behind the yen's slide. Even after the Bank of Japan raised interest rates for the first time since 2007 in March, policymakers have signalled a go slow approach to further tightening, which has kept long-term Japanese government bond yields well below 1%. Equivalent Treasury yields have been pushing towards 5% as a robust economy and stubborn inflation forced markets to scale back their bets on Federal Reserve rate cuts. Fed Chair Jerome Powell reinforced that idea on Wednesday when he reiterated that it "will take longer than previously expected" for policymakers to become comfortable that inflation will resume the decline towards their 2% target. ($1 = 155.1400 yen) Sign up here. https://www.reuters.com/markets/currencies/japans-may-1-intervention-may-have-cost-236-bln-boj-data-suggests-2024-05-02/

2024-05-02 08:40

South Korean won most shorted currency Short bets on peso, baht, Singaporean dollar highest since Oct. 2022 Bearish positions on rupiah highest in six months May 2 (Reuters) - Short bets on most Asian currencies firmed to touch multi-month highs as growing expectations of U.S. interest rates staying higher for longer dampened appetite for riskier assets, a Reuters poll showed on Thursday. Bearish positions on the South Korean won , the Singapore dollar , the Philippine peso and the Thai baht rose to their highest level since mid-October 2022, according to a fortnightly poll of 12 analysts. "Most EM risk premium is low when considering how much yields have converged, if not have been overtaken, by those in the U.S. So the willingness to have open EM FX exposures in some local fixed income is less compelling," HSBC said in a note. "A lot more is needed for EM FX to begin to bloom, including the Fed and major central banks to start easing and global growth to shift onto a convincing upturn," it added. Most of the poll responses came before the U.S. Federal Reserve held interest rates steady on Wednesday. Chair Jerome Powell said rate increases remained unlikely, but he set the stage for a potentially extended hold of the benchmark policy rate in the 5.25%-5.50% range, noting the recent disappointing inflation readings. If the Fed does not cut rates this year, Asian currencies might not get a breather and would risk seeing another year of depreciation against the U.S. dollar, which has so far remained buoyant, analysts said. Christopher Wong, a currency strategist at OCBC said that renewed weakness in the Chinese yuan and the yen can also undermine the sentiment towards Asian currencies. Bearish bets on the yuan, which logged a fourth straight monthly decline in April, remained unchanged from a fortnight ago. Investors raised their short positions on the Indian rupee after turning bearish on the currency for the first time in four months only a fortnight ago. Short positions on the Indonesian rupiah were the highest in six months, while those on the Malaysian ringgit were the highest since last July. The rupiah has been trading around 16,200 per dollar levels since the middle of April and has fallen more than 4% so far this year. Bank Indonesia raised its policy rates last week to support the rupiah, and has been intervening to defend the currency amid global uncertainty about the timing of U.S. rate cuts and tensions in the Middle East. "For IDR and INR, we still expect interventions by the authorities aiming at curbing volatilities in case the USD becomes stronger," said Ryota Abe, an economist with Sumitomo Mitsui Banking Corp. Analysts at HSBC said that the won and the baht could recover more than their peers in case the Fed embarks on its rate cut cycle in the second half of the year and geopolitical risks are manageable. The Asian currency positioning poll is focused on what analysts and fund managers believe are the current market positions in nine Asian emerging market currencies: the Chinese yuan, South Korean won, Singapore dollar, Indonesian rupiah, Taiwan dollar, Indian rupee, Philippine peso, Malaysian ringgit and the Thai baht. The poll uses estimates of net long or short positions on a scale of minus 3 to plus 3. A score of plus 3 indicates the market is significantly long U.S. dollars. The figures include positions held through non-deliverable forwards (NDFs). The survey findings are provided below (positions in U.S. dollar versus each currency): Sign up here. https://www.reuters.com/markets/asia/bearish-bets-most-asian-fx-climb-multi-month-highs-2024-05-02/

2024-05-02 08:27

Authorities' goal is to prevent yen free fall - ex-BOJ Takeuchi Keeping markets on guard over intervention maximises impact Japan will keep intervening until mission accomplished Government does not invest in assets that are hard to sell TOKYO, May 2 (Reuters) - Japan will likely keep intervening to prop up the yen until the risk of speculators triggering a free fall in the currency has been eliminated, said a former central bank official who was involved in Tokyo's market forays a decade ago. The yen jumped on Thursday on what traders suspect was the second day of intervention following such action on Monday to stem the currency's sharp declines. Japan's Ministry of Finance has declined to confirm whether it had stepped in, leaving markets on edge over the chance of another bout of intervention. Atsushi Takeuchi, who headed the Bank of Japan's foreign exchange division when Tokyo intervened back in 2010-2012, said Japan probably stepped into the market on Monday because of the sudden, big loss the yen suffered over a short spell that day. "If you leave a sudden 2-3 yen move in a single day unattended, you risk triggering a yen free fall that heightens anxiety over the yen and the broader economy," Takeuchi said. By intervening when the yen's decline accelerates over a short period, authorities can maximize the psychological impact by keeping traders on guard over the chance of more action, he said. "Authorities will continue to intervene for as long as needed to ensure they accomplish their mission, which is to prevent speculative trading from causing a yen free fall," he told Reuters on Thursday. Members of the Group of Seven of advanced economies, including the United States, are unlikely to complain even if Tokyo keeps intervening, as long as the moves are focused on addressing rapid, speculative yen moves, he said. Takeuchi brushed aside concerns of some market players that there were limits to how much of its $1.29-trillion worth of foreign reserves Japan can use to intervene because some of its U.S. Treasuries holdings could be hard to sell. "The whole point of Japan holding such huge foreign reserves is to prepare for cases like now, when it needs to intervene," Takeuchi said, stressing that the government did not invest in assets with low liquidity that are difficult to sell. "It's true authorities need to be mindful of the market impact when selling assets to fund intervention. But the U.S. Treasury market is huge, so it shouldn't be a problem." Japan has historically focused primarily on preventing sharp yen rises that hurt its export-reliant economy. Takeuchi took part in several yen-selling interventions from 2010 to 2012. He is now chief research fellow at Ricoh Institute of Sustainability and Business. Under Japanese law, the government holds jurisdiction over currency policy, while the BOJ serves as an agent of the finance ministry, which decides when to intervene. Sign up here. https://www.reuters.com/markets/asia/ex-boj-official-predicts-japan-will-keep-intervening-prevent-yen-free-fall-2024-05-02/

2024-05-02 07:54

MUMBAI, May 2 (Reuters) - India's improving trade deficit, inflows into bonds and reduced pressure on the rupee in the offshore market has lowered the need for the Reserve Bank of India (RBI) to intervene aggressively in the foreign exchange market. The RBI's interventions eased significantly earlier this year, with the RBI buying $8.5 billion in February and not making any sales, its latest monthly bulletin showed. Its gross FX intervention in February was the lowest in six months and about an eighth of the average monthly intervention during October-December. "Pressures (on the rupee) eased in the January-March period vis-a-vis October-December, which in turn reduced the magnitude of intervention," Vivek Kumar, an economist at QuantEco Research said. Kumar reckoned that factors like the drop in India's trade deficit would have contributed to the reduced FX activity. The merchandise trade deficit narrowed to an 11-month low in March. India's current account will wing to a surplus in the March quarter, economists said. The data on RBI's total FX activity reflects its two-sided interventions in the onshore spot and non-deliverable forwards market as well as the maturity of forwards, a person familiar with the central bank's thinking said. "When the conditions are favorable and the RBI doesn't need to intervene in the offshore market, the gross amount will come down," this person said, requesting anonymity as they are not authorised to speak to the media. While data for the total turnover in the non-deliverable forwards market is not available, the ratio of RBI's FX activity to the interbank spot and forwards market turnover is a comparative metric. This ratio declined from 0.14 in October to 0.01 in February, signaling a decline in the extent of RBI's interventions. The fall in RBI's forex market activity followed the IMF's December reclassification of India's exchange rate regime to "stabilised arrangement" from "floating". "The decline in RBI's aggregate FX intervention may have been co-incidental with the IMF's reclassification," Dhiraj Nim, an economist at ANZ Bank said. Going forward, the FX interventions are likely to be concentrated towards buying dollars as the central bank would look to absorb inflows and limit the rupee's appreciation against peers like the Chinese yuan, Nim said. Sign up here. https://www.reuters.com/world/india/india-cenbanks-fx-intervention-eases-conditions-turn-favourable-rupee-2024-05-02/

2024-05-02 07:07

TOKYO, May 2 (Reuters) - The yen surged against the dollar on what traders suspect was another round of intervention by Japanese authorities to stem the currency's sharp declines. While authorities have not confirmed whether they stepped in, below are some hints on Tokyo's new intervention tactics: WHY DID THEY STEP IN? The yen fell below the key 160-to-the-dollar line after Bank of Japan Governor Kazuo Ueda said on Friday the currency's recent declines had little immediate impact on prices - remarks traders saw as ruling out a near-term interest rate hike. Having seen the dollar/yen spike above the psychologically important 160 mark, Japan likely intervened on Monday to arrest what top currency diplomat Masato Kanda described as "excessive volatility driven by speculative trading." Kanda, who oversees Japan's currency policy, declined to comment on whether authorities stepped in but said they "hope to continue taking appropriate action as needed." Tokyo is suspected to have intervened again in early Asian hours on Thursday, likely to arrest abrupt yen moves after U.S. Federal Reserve Chair Jay Powell's news conference. Japanese policymakers have said the weak yen hurts the economy by boosting import costs, suggesting they could intervene not only to stem sharp moves but to keep excessive yen rises from hitting households via rising living costs. WHAT'S DIFFERENT THIS TIME? Traders suspect authorities stepped in at least on two days this week, both at unusual timings. The first time was on Monday, when Japanese markets were closed for a holiday. The second was shortly after the U.S. stock market closed in early Asian hours on Thursday. This shows Japanese authorities would step in any time of the day, regardless of whether Tokyo markets are open, if they see the need to prevent sharp moves in the yen. In the past, they would typically prefer to step in during Tokyo market hours when they could place orders with trusted dealers at Japanese megabanks. WHAT IS AUTHORITIES' NEW LINE-IN-THE-SAND? Authorities look more at the speed, rather than the level, of the yen in deciding when to intervene. But market players and former finance ministry officials see 160 yen to the dollar as authorities' line-in-the-sand for intervention. Daisaku Ueno, chief FX strategist at Mitsubishi UFJ Morgan Stanley Securities, says authorities likely bought yen around 157-159 to the dollar in several stages this week, to create a buffer to defend the 160 mark. The dollar last stood at 155.70 yen in Asia on Thursday. Ueno, who is well-versed in yen flows, also said the dollar's next resistance stood at 164.50 yen hit in 1985. Once that is breached, there is no technical resistance until 260, he says. DID JAPAN GET G7 CONSENT? The decisive moment was on April 17, when Japan and South Korea succeeded in getting U.S. to acknowledge their "serious concerns" about their currencies' declines in a trilateral finance leaders' gathering. During their stay in Washington on the sidelines of the IMF meetings in April, Japanese officials also lobbied to get G7 consent on dealing with excessive currency volatility as needed. U.S. Treasury Secretary Janet Yellen told Reuters on April 25 that the robust dollar reflected the strength of the U.S. economy, insisting that interventions by governments in currency markets were acceptable only in rare circumstances. The remarks suggest Washington won't join Tokyo in coordinated intervention, but won't openly criticise its intervention either as long as they are targeted and focused on arresting speculative, sharp falls in the yen. HOW MANY TIMES MORE CAN JAPAN INTERVENE? When Tokyo intervenes to support the yen, authorities tap Japan's $1.29-trillion worth of foreign reserves for dollars to sell for yen. Of the total, roughly $155 billion is held in deposits and another $994 billion in securities of which most are seen as U.S. Treasuries. Combined, Japan theoretically has $1.15 trillion it can tap swiftly for intervention. But analysts are divided on how much can actually be used for intervention as some securities may not be easy to sell. Some put the limit at around $300 billion, while others see scope for authorities to spend much more. Tokyo is estimated to have spent roughly 5.5 trillion yen ($35 billion) in Monday's intervention. Authorities could intervene about eight times on the same scale based on the limit of around $300 billion, or several more times depending on how willing they are to unload their U.S. Treasuries. ($1 = 155.7900 yen) Sign up here. https://www.reuters.com/markets/asia/what-are-japans-tactics-based-latest-suspected-yen-intervention-2024-05-02/

2024-05-02 07:06

Greece unveils new wildfire doctrine Experts say more needs to be done Hottest winter on record raises threat of summer blazes ATHENS, May 2 (Reuters) - When firefighters arrived at a blaze in a pine forest on the Greek island of Rhodes last July, flames were already leaping above the trees into the night sky. The volunteers needed to act fast, but dense vegetation on the forest floor blocked access. With crews unable to get close, the fire spread and within days had engulfed the Mediterranean island, forcing 19,000 people to flee - one of the biggest disaster evacuations in Greece's history. "Have you ever tried walking through a forest that has not been cleared for more than 10 years? It's so difficult," said firefighter Nikos Karpathakis, who was at the scene. As another summer approaches, and as climate change makes wildfires ever more deadly across southern Europe, Greece has developed a new doctrine to contain the damage, including deploying an extra fire truck to each new blaze, speeding up air support and clearing forests. But five firefighters and three experts said the initiative doesn't address shortfalls in planning and prevention and more devastation awaits. "We are clinging to a doctrine which insists on fire suppression instead of adopting an integrated fire management strategy," said Theodore Giannaros, a fire meteorologist at the National Observatory of Athens. Heat waves triggered wildfires across swathes of Portugal, France, Spain and Italy last year and caused dozens of deaths. The situation is especially dire in Greece, which has just recorded its warmest winter on record, creating ideal conditions for fires that threaten crops, homes and the booming tourism industry. Last August, a fire in the northern Evros region destroyed an area larger than New York City and killed at least 20 people - the deadliest European blaze of 2023. Fires this year have begun earlier than expected, including one in March in a mountainous area normally blanketed by snow. "It will be a very tough wildfire season. Climate change is here," Vassilis Kikilias, Minister for Climate Crisis and Civil Protection, told Reuters. MORE NEEDED Greece has made strides to combat fires, including building firebreaks around power poles in forested areas and stepping up training. Some 700 additional forest rangers were hired this year. Crews have cleared 12,000 hectares of forest since 2022 and another 7,000 hectares will be completed by the end of May, the environment ministry said. "For the first time in 50 years, we're stepping into forests and building firebreak zones," Kikilias said. "Certainly it won't be done at once throughout Greece but it's a good start." Under a 2.1 billion euro ($2.25 billion) plan, Greece has concluded tenders for more than 1,000 fire engines and seven DHC-515 aircraft, and plans to install sensors to detect smoke. Experts worry it won't be enough. The cleared forests make up only a tiny fraction of the nearly 7.5 million hectares of Greek woodland. Some of the tendered trucks and aircraft will not be delivered for years. They said more money should be spent creating a corps of wildfire specialists who can draft risk maps and analyse how fires are likely to spread. They recommended embracing firefighting methods used in other parts of the world, such as "backfiring", where firefighters light new fires in the path of existing ones to starve them of fuel. Volunteer firefighter Karpathakis is haunted by last summer. He said crews laid down 2 km of hoses to get closer to the Rhodes fire. It was too late. Gale force winds blew the blaze beyond their reach. "I worked non-stop for so many days but the situation didn't get any better." Sign up here. https://www.reuters.com/world/europe/greek-summer-wildfire-threat-nears-outpacing-plans-contain-it-2024-05-02/