Photo/Illutration A screen at UTForex, a foreign exchange broker in Tokyo, shows on Oct. 18 that the yen dropped to the 149-yen level against the dollar. (Ikuro Aiba)

As the yen slid to 149 against the dollar on Oct. 18, the further weakening raised alarms among foreign exchange traders about whether the government is poised to soon step in for a second time.

Traders are watching for whether the depreciating currency will hit the 150-yen level, seen as a key number that could trigger another round of government intervention to prop up the yen.

Investors are on alert as some expect there to be “covert intervention,” or a secret market intervention by the government without an announcement that it has been conducted.

At a news conference after a Cabinet meeting on Oct. 18, Finance Minister Shunichi Suzuki said he is monitoring the situation closely.

“Again, I will keep a watchful eye on market movements today,” he said.

Nearly one month has passed since the government and the Bank of Japan carried out a foreign exchange intervention for the first time in 24 years on Sept. 22 to sell the greenback and buy up yen.

The Japanese currency has dropped by more than 4 yen against the dollar since then.

While investors are bracing themselves for the prospect that the exchange rate could break through the 150-yen mark, U.S. President John Biden has made his position clear on the appreciation of the dollar.

“I'm not concerned about the strength of the dollar,” he told reporters on Oct. 15.

As traders prepare for possible next steps by the government, some have even begun to speculate that it might have already carried out the covert intervention.

This speculation was driven by how the yen fluctuated on the evening of Oct. 13, when it dropped into the upper 147-yen range, a 32-year low, but also momentarily rose by 0.7 yen.

When asked at the news conference about whether the government has already conducted a covert market intervention, Suzuki did not deny the possibility.

“I won't comment on it,” he said.

Teppei Ino, a chief analyst at MUFG Bank, said this is enough to make investors raise their eyebrows.

“A strategy that doesn’t clarify whether the government carried out an intervention is quite effective at making market participants suspicious.”

As of 3 p.m. on Oct. 19, the Japanese currency is being traded at the lower 149 yen-range against the dollar on the Tokyo foreign exchange market.

(This article was written by Yasuyuki Onaya and Yuki Kubota.)

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