Japanese Finance Minister Suzuki escalated his verbal intervention in the yen in remarks today. Suzuki conveyed key points from a meeting he had with US Treasury Secretary Yellen, among them that he explained to Yellen that recent yen falls are rapid, but that he did not express concerns over the movement.
Suzuki went on to confirm that the government has been saying that rapid yen moves are undesirable, and what’s happening now can be seen as rapid moves. He added that FX moves will be monitored closely and “with a sense of urgency”.
While this is an escalation in rhetoric there was nothing to indicate actual intervention is imminent.
USD/JPY has traded back to its US time high circa 128.60.
Also from Japan today we had March CPI data. The core rate (which excludes volatile fresh food prices but includes fuel costs) jumped 0.8% y,y and is the 7th consecutive month of gains for the indicator. It was also the fastest year-on-year rise since January 2020.
The CPI measure that excludes energy prices and fresh food continued to show in the negative.
The Chinese yuan continued to drop against the dollar during the session. Onshore yuan, CNY, hit its weakest since September last year.
From the People’s Bank of China we heard from Governor Yi Gang. He promised more support for the economy. The moves from the PBOC since China’s leaders issued instructions for further supportive policy have been minor only. Late last week the reserve requirement ratio (RRR) was cut by just 25bps (the usual move is 50 to 100). On interest rates the latest medium-term lending facility (MLF) (back on Friday the 15th) was conducted at an unchanged rate. This week the loan prime rates (LPR) were left unchanged. While we had words from Governor Yi Gang today, we are awaiting action.
Across major FX moves were fairly subdued. As noted, USD/JPY gained ground. Cable, EUR/USD are fairly flat. AUD, NZD, CAD are a touch weaker against the dollar.
USD against the onshore yuan, CNY: