So much of the speculation was right. The Japanese yen definately isn't accompanying the euro on it's climb upwards - some things in life you just have to do alone - and they have spent this month alone 5.6 million dollars (in yen of course) to back their determination. The curious thing is that they tried to keep quiet about it. My feeling is that it is now only a matter of time before the ECB gets the message and starts to intervene itself, whether by dropping rates or selling euros, before we have the curious spectacle of three of the four major currencies trying to beat themselves down. Sterling could then be the one with the problem, since with house prices rocketing the BofE certainly won't be looking to bring rates down, except that with Blair backing Bush on Iraq, so the petro dollars won't be heading for London any time soon.
Japan's Ministry of Finance intervened in the foreign exchange market this month to weaken the yen, but did not tell investors until monthly data on Friday uncovered the transactions. The Bank of Japan used some Y678bn ($5.6bn) in a series of actions to buy dollars for yen to stem the Japanese currency's appreciation. An official on Friday said the move was designed to stabilise the yen rather than actively weaken it.Despite the weakness of Japan's economy, the dollar's renewed slide has led the yen to strengthen in spite of officials' attempts to talk it lower. The Japanese currency has gained some 6 per cent in the past two months, prompting concerns about the damage a stronger currency will do to exporters' balance sheets and its possible impact on Japan's struggle against deflation.
The dollar stood at Y119.3 against the yen on Friday, up from three-month lows at Y117.5 earlier this month. Analysts said the covert nature of the BoJ's actions was a surprise. The bank, which holds massive reserves, has frequently intervened publicly in the market to limit yen strength and last acted in a series of moves between May and June last year.
Source: Financial Times