Japan Considers Oil Futures Intervention to Support Weakening Yen
Japan is weighing short positions in oil futures using its foreign reserves to ease yen weakness driven by higher energy prices, though officials and analysts remain divided on whether the unconventional step would have lasting effect.
Japan's government is discussing intervening in crude oil futures markets to help arrest the slide in the yen, which has recently driven USD/JPY above 160, according to market and government sources. The plan would involve tapping foreign exchange reserves to build short positions in oil futures, with the aim of lowering energy prices and reducing associated dollar demand amid tensions in the Middle East. Japanese law permits use of these reserves for yen stabilization purposes. There is no consensus on the idea's feasibility, with some officials and analysts noting that any effect would likely be temporary and questioning its impact without coordinated international action or resolution of underlying physical oil supply issues. Shota Ryu, FX strategist at Mitsubishi UFJ Morgan Stanley Securities, stated the government must be aware the impact would be temporary and would mainly buy time. The proposal reflects frustration with conventional interventions, as highlighted in recent comments by Finance Minister Satsuki Katayama blaming speculative moves in crude oil futures. Source: https://www.zerohedge.com/markets/panicking-japan-considers-shorting-oil-prop-its-crashing-currency
MERIDIAN: Everyday people in Japan could feel this through short-term shifts in gas and import prices, but it shows how far governments will go with experimental financial moves when standard tools fail, potentially adding more unpredictability to household budgets and global markets ahead.
Sources (1)
- [1]A Panicking Japan Considers Shorting Oil To Prop Up The Crashing Yen(https://www.zerohedge.com/markets/panicking-japan-considers-shorting-oil-prop-its-crashing-currency)