This via Reuters, on the current neither confirm nor deny policy out of Japan:
- Japan has recently switched tack in how it conducts currency intervention. Rather than confirm action as in the past, Japan's Ministry of Finance and the Bank of Japan have left the market guessing as to whether or not it intervened on a particular occasion.
- Granted, reports of the size of transactions on Friday and Monday, and moves in USD/JPY, leave no doubt in the minds of most that intervention actually took place. That said, this new strategy leaves open the possibility of smaller, perhaps more frequent interventions, and could keep market participants cautious for longer.
- Banks, which operate on behalf of Japanese authorities during interventions, are likely to remain mum on whether they were used for fear of being blacklisted by the BoJ. Monday saw especially good USD sales by one major Japanese mega-bank. Friday may have seen all three of Japan's major banks in action given the reported scope of the intervention.
This chart is from Monday, showing a 400-odd point drop in just minutes.
