USD/JPY: Top 10 Largest Moves and How the BoJ Responded

The sell-off in USD/JPY this evening is one of the top 5 largest moves ever for USD/JPY. Whenever USD/JPY experiences such sharp volatility over a short period of time, the Bank of Japan usually comes in to quell the volatility. The following table shows the Bank of Japan’s actions in response to the top 10 largest moves ever in the currency pair. As you can see, the BoJ came into the market 7 out of the last 10 times USD/JPY experienced such a strong move. The reason why they did not intervene in 1998 was because USD/JPY was trading at 121 at the time. They also did not intervene in 2008 because USD/JPY jumped 5.66 percent, which helps rather than hurts the Japanese economy. Reuters reported that G7 finance ministers will be holding conference call on Japan tomorrow. Intervention by the BoJ is very likely this evening and if that fails to do the trick, the central bank and the Ministry of Finance could make a plea for coordinated intervention when the G7 meets tomorrow.

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  1. Any reason May 6, 2010 was left off the list?

    That was a 600 pip plus drop in a day, with the lion’s share of 370+ pips in an hour. Much like today.

    Just wonderin’ 😀

  2. I think you’re share quite the traits of John Rusnak who was bullish on the yen. He believed the yen had taken all the damage it could following the bursting of the Japanese bubble. Further, Rusnak believed the yen would appreciate consistently against the dollar. Under these conditions, a trader normally would buy forward contracts to get yen for cheaper than market value, while hedging the position with a combination of put and call options. In practice, Rusnak was so bullish on the yen that he neglected to hedge his forward contracts. His luck held, however, until a series of policy changes in Asia culminated in crisis on the Asian market and prompted a long slide in the value of the yen and other Asian currencies.

    PS Perhaps it’s her assistant who prepared the report…. just wondering 😉


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