The Bank of Japan cut short its planned two-day meeting and went straight for the currency market’s jugular, sinking its teeth deep in to the artery and achieving the maximum blood-loss from its victims. The unilateral nature of its intervention was precisely what the authorities had hinted at the day before. Market participants were clearly distracted by the blood still flowing dangerously from other open wounds as growth stalls around the world adding to fears that the death-spiral facing investors is merely at the beginning.
Japanese yen – Considering the pretty well-flagged signs that the Bank of Japan would likely intervene after its August policy meeting, the impact was still significant. A 4% slump in the yen was the largest since intervention in October 2008 and achieved more today than when G7 central bankers joined forces on March 17 in the wake of the Japanese earthquake and tsunami. And while the impressive result is a dollar rally back above ¥80.00 I’m still left wondering whether the yen’s restraint can be maintained.
Read the rest of the story: Bank Of Japan’s Yen Intervention Leaves Trail Of Blood And Gore – Great Speculations – Buys, holds, and hopes.