Morgan Stanley observes that despite USD/JPY surpassing the 150 mark following strong US CPI data, Japan's Ministry of Finance (MoF) showed only moderate concern through verbal intervention. Their commentary suggests that while rapid currency movements are monitored, there's no immediate push to counteract the yen's depreciation. This stance is understood within a broader macroeconomic context where a weaker yen has already bolstered corporate earnings without excessively impacting import prices.
Key Insights:
- The MoF's verbal intervention on rapid JPY movements indicates a monitoring stance rather than immediate action to strengthen the yen.
- Despite crossing the 150 threshold, the MoF's concern level was not at its peak, suggesting a nuanced approach to currency management.
- A weaker yen, contributing to higher corporate profits and manageable import prices, aligns with Japan's current economic objectives, diminishing the urgency for intervention.
Conclusion:
Morgan Stanley suggests that Japan's Ministry of Finance is not in a hurry to intervene against the yen's weakness. The recent verbal intervention highlights a cautious watchfulness rather than a commitment to immediate action, reflecting a balance between the benefits of a weaker yen for corporate earnings and the potential risks of rapid currency depreciation.
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