The Yen Exchange Rate Hit A Record High Of &Nbsp; Multilateral Intervention Is Expected To Heat Up.

Because of market risk aversion

Despite the recent oral intervention by the Japanese government on the yen exchange rate several times, it is difficult to prevent the yen's strong rise and the pessimism of investors in the global economic outlook.

Analysts say unilateral intervention by the Japanese government has been difficult to maintain long-term effect, and multilateral consultation on financial market turmoil is the solution.

At the moment, the market is closely watching the global central bank's regular annual meeting on Friday (26) in Jackson, Wyoming, as well as the speech of Federal Reserve Chairman Bernanke.

Unilateral intervention is difficult.

In order to reverse the unilateral appreciation of the yen since mid July, the Japanese government and the Bank of Japan intervened in the foreign exchange market in August 4th and spent 4 trillion and 500 billion yen (US $58 billion 500 million).

The move has hurt the yen.

But it did not last long. Since the first downgrade in the history of the US credit rating agency by the international credit rating agency in August 5th, the market panic has heated up. The US dollar to Japanese yen exchange rate began to decline for 10 consecutive trading days, and on the eleventh trading day, that is, in August 19th, the New York exchange market, the exchange rate reached 75.95 of the lowest post World War II record.

According to Bloomberg data, as of 19 days, the US dollar to Japanese yen exchange rate has fallen 5.6% in the past three months, and the Japanese yen rose to second place in the world's major trading currencies after Swiss Franc (12%).

Japan's Nikkei news 20 commented that as investors continue to heat up fears of global economic recovery and financial market turmoil, the flow of money to the relatively safe currency, the yen, is increasing.

In addition, the expectation that the US will further introduce quantitative easing monetary policy is also heating up, and has become the reason for the increase in yen buying.

Recently, the US and global financial markets have experienced dramatic fluctuations.

Among them, the US stock market suffered a two consecutive day of slump following the announcement of a series of bad economic data on Thursday, making the S & P 500 index down 4.7% last week and gaining a fourth consecutive week of decline, with a total decline of 16.44%.

Meanwhile, the volatility index, a measure of market participants' panic mentality, has remained at a recent high level for 48 years in the past two years, reaching 43.05 on the 19 day after August 8th. This indicates that the market's recent worries about the prospects for us economic recovery and the debt of the US and Europe remain high.

On the 19 day, Japanese finance minister Noda Kahiko said that intervention in the foreign exchange market needed "surprise", and the government was ready to intervene in the foreign exchange market when needed.

This is the second time the Japanese government has warned against the strengthening of the yen exchange rate in a week.

On the 14 th of this month, Noda Kahiko said he would take "resolute measures" to strengthen the yen.

However, most analysts in Japan believe that the effect of the Japanese government's unilateral intervention in the foreign exchange market is expected to not last long in the light of the weakness of the current global economic outlook and the anticipation of a new round of quantitative easing by the Federal Reserve.

At present, the focus of the market is focused on the regular annual meeting of the Central Bank of the United States in Jackson, Wyoming, 26, and the statement by Federal Reserve Chairman Bernanke about the US economic outlook and monetary policy trend.

At the last regular annual meeting held at the end of August 2010, Bernanke said the Fed would adopt "unconventional" measures to prevent the us from falling into deflation and stimulating economic growth and stimulating employment.

Subsequently, the Federal Reserve from November to June 2011, through the cumulative purchase of US $600 billion treasury bonds to stimulate the growth and employment of the United States, the move was called the second round of the QE2's quantitative easing monetary policy.

In addition, on the 9 day of the Federal Reserve monetary policy meeting, the Fed said that the US economic growth rate was "significantly lower than" previously expected, the Fed is ready to adopt a series of policies to stimulate economic growth, and will maintain ultra-low interest rates for at least two years.

At present, the market is anticipate that the multilateral consultation of the international community to solve the turbulence of financial market is heating up.

Noda Kahiko also said at the 19 news conference: "the finance ministers and central bank governors of the G7 member countries need to maintain close cooperation in the coming weeks and take all necessary measures to stabilize financial markets and support economic growth."