MUFG’s Lee Hardman reports the Japanese Yen has weakened again, pushing USD/JPY back above 162.00 as higher energy prices and fading impact from last week’s verbal intervention weigh on the currency. He explains that uncertainty over any formal policy shift at the GPIF and the slow timeline for potential changes limit near-term support for domestic assets and the Yen.

Yen soft as GPIF policy remains unclear

"The yen has re-weakened at the start of this week resulting in USD/JPY rising back above 162.00."

"All of the gains recorded on Friday after verbal intervention from Finance Minister Katayama have been reversed."

"While we certainly view this as potentially meaningful, we still have only had this comment made by Finance Minister Katayama at a regular press conference and hence to what extent any formal policy is being compiled is unclear."

"So we think firstly we would need to see this cited more regularly as something being looked at from a policy perspective with the MHLW then formulating an updated objective."

"It is the GPIF’s Board of Governors that ultimately set the asset composition mix and all of this certainly points to no quick implementation of any new policy."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor. Know more.)