Traders on edge as yen plunges

The yen fell to a 34-year low, leaving traders nervous as to whether Tokyo will intervene while policy deliberations are still under way.

Japan's currency depreciated as much as 0.4 percent to a session low of 155.37 on Wednesday, marking the first time since June 1990 the yen crossed the 155 level against the greenback.

It traded at 155.6 at 5.10pm in Hong Kong yesterday. Every 100 yen fluctuated at around HK$5.03.

"Intervention risk remains high, regardless of the level," said Win Thin, global head of markets strategy at Brown Brothers Harriman.

Helping drive the yen lower was demand for contracts to sell it against both the greenback and euro, as per data from the Depository Trust and Clearing Corporation.

That included a US$300 million (HK$2.35 billion) purchase of options that expire in a month to sell the Japanese currency at 156 per dollar, pressuring the yen in the spot market.

With yen much weaker than it was then, and US interest rates unlikely to come down anytime soon, a lack of any hawkish comments from Bank of Japan governor Kazuo Ueda today may be enough to push the currency toward a possible inflection point.

Based on comments from Masato Kanda, the top official at finance ministry, 157.60 yen versus the dollar is one key level to watch.

Nomura Asset Management forecasts the yen per greenback to not exceed 160, which could result in the BOJ's intervention.

Traders will be on high alert when the BOJ releases its policy statement and forecasts around midday today, then when Ueda holds a press conference, and once more when data on the Federal Reserve's preferred inflation gauge is released.

Former American president Donald Trump criticized the high US dollar-yen exchange rate, saying it was "a total disaster for the US" as manufacturers and companies would lose business and be forced to build plants overseas.