Yen Weakens Past 145 Per Dollar, Nears Prior Intervention Levels

(Bloomberg) -- The yen slid back past 145 per dollar, prompting renewed warnings from Japan's finance minister and boosting speculation the government may intervene prop up the currency for a second time this year.

The nation's currency slipped as much as 0.4% to 145.30, extending this year's decline to 21%. The yen had tumbled to a 24-year low of 145.90 on Sept. 22 before policy makers stepped in to contain losses.

“If we see excessively one-sided moves or something similar, we will take bold action as needed,” Finance Minister Shunichi Suzuki said, speaking after the move beyond 145. “That thinking hasn't changed.”

The yen has slumped this year due to a widening policy divergence between the dovish Bank of Japan and hawkish Federal Reserve. Japan's finance ministry spent 2.84 trillion yen ($19.6 billion) in September to slow its losses.

Officials may intervene again “but history suggests the impact may only be short-lived unless intervention is coordinated,” said Christopher Wong, a strategist at Oversea-Chinese Banking Corp. in Singapore. “The yen is at risk of further depreciation as long as the BOJ's yield-curve control remains in status quo and other central banks, including the Fed, continue to embark on tightening or policy normalization.”

Japan had $1.29 trillion of foreign-exchange reserves as of Aug. 31, of which $135.5 billion was deposits with foreign central banks and the Bank for International Settlements.

“The growing consensus in the market is that Japan won't intervene when the yen is at 145 levels considering the nation only has limited capacity,” said Fukuhiro Ezawa, head of financial markets Japan at Standard Chartered Bank in Tokyo.

When Japan intervened to support the yen in 1998, the country didn't act unilaterally as the US was also involved in selling dollars.

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