JPY cannot be sustained by interventions. Overview for 30.12.2022

The Japanese yen against the US dollar has accumulated some strength but will soon slide back down without support. The current quote is 132.48.

On Friday, the BoJ announced the third in a row unscheduled bond purchase. The regulator is going to buy an unlimited number of 2-year bonds with 0.04% yield and 5-year bonds with 0.24% yield. Moreover, one to ten-year bonds for 5.3 billion USD and ten to twenty-five year bonds for 2.7 billion USD have been offered for purchase.

So, the BoJ is following its strategy of interventions and massive bond purchase in order to pump liquidity into the market. The effect of these measures is yet unclear. Anyway, this is for certain the first step to tightening the monetary policy. Yet the whole way might be very tough.

The yen shows almost no reaction to interventions because at the end of the year companies send their cash flows to the national currency.