In a recent news article, it is reported that Suzuki, a Japanese official, made a verbal intervention attempt regarding the foreign exchange (FX) market. However, his comments were not alarming enough to significantly affect traders. Suzuki stated that there should not be a predetermined ‘defence line’ when dealing with FX movements and that they would not rule out any measures to respond to disorderly FX movements. He also mentioned that they are closely monitoring FX movements with a sense of urgency.
Suzuki’s reference to a ‘defence line’ implies a specific threshold for the USD/JPY exchange rate, which would trigger intervention. However, he did not explicitly indicate a firm level for this line. If Suzuki were to specify a level, traders would likely test his resolve by pushing the rate to that point. In the event of intervention, any initial dip in the rate would likely be bought off by traders for another attempt. Conversely, if Suzuki refrains from intervention, his warnings would be perceived as empty threats.
Overall, this situation in the FX market seems to resemble a one-way street, where traders are cautiously analyzing Suzuki’s statements while considering potential actions and reactions in response to intervention attempts.
