On April 29th, the Japanese yen broke out of a roller coaster trend.
According to a report by CCTV News citing foreign media on April 29th, on the international foreign exchange market that day, the exchange rate of the Japanese yen against the US dollar fell below 160 yen to 1 US dollar, once again hitting a new low in about 34 years. The exchange rate of the Japanese yen against other major currencies has also rapidly declined, with the euro exchange rate falling below 171 yen to 1 euro, setting a new historical low. In the afternoon of that day, the Japanese yen rapidly appreciated against the US dollar, briefly breaking through 156 yen to exchange for 1 US dollar.
Regarding the fluctuation of the Japanese yen exchange rate, some market reports suggest that this may be an "Oolong Index" transaction, indicating extreme speculative behavior in the spot and options sectors, as well as the high sensitivity of investors to intervention risks.
Some analysts suggest that the significant fluctuations in the Japanese yen exchange rate may be due to lower market liquidity during the holiday period in the Japanese market.
Shoki Omori, Chief Strategist at Mizuho Securities, said that the significant fluctuations in the yen against the US dollar today may be due to weak market liquidity during public holidays in Japan, rather than actual intervention. "Due to the weak liquidity in the Japanese yen market during holidays, it means that the yen is already prone to volatility." Omori said, "The past few days have been too fast, and the market may have profited in the 160 and 159.5 line." Omori said that algorithmic account adjustments may also have driven the market's trend.
Bank of America stated that due to Japan's market closures today (April 29), Friday (May 3), and next Monday (May 6), foreign exchange liquidity during Asian trading hours may still be very low. The Japanese authorities may remain on standby during the holiday period and intervene if necessary. Bank of America predicts that the required foreign exchange intervention may exceed 9.2 trillion yen in 2022, possibly exceeding 2% of Japan's GDP.