There is speculation that Tokyo intervened in the currency market on Wednesday. If true, this would be the second time in recent days.
Japan held $1.16 trillion in foreign exchange reserves at the end of March. If each intervention were around the reported $34.5 billion, that would imply capacity for roughly 32 more interventions. Not that they would or can, but it is an interesting little fact.
For one, Japan may only have room for two more interventions before November if it wants to maintain its freely floating exchange rate status.
So far, the suspected interventions have supported the yen, but only briefly, while also injecting some hefty volatility.
Since Japan’s first intervention on March 30, there appears to be opportunity to trade within the wicks of USDJPY, but more so in GBPJPY and EURJPY. For traders, this may create more room to capture downside moves with tools like a trailing stop loss, or to look for better long entry levels.
Trading involves risk and may not be suitable for all investors. The information provided in this article is for educational purposes only and does not constitute financial advice. Always conduct thorough research and seek professional advice before making any investment decisions.
