Both countries have not done much since mid-May as the dollar cruised higher, gaining 8%-10% against their currencies and for any number of reasons – the yields, the flailing Chinese economy and the health of banks.
But it’s time to get twitchy when the yuan is closing in on the 7.3-per-dollar levels last seen in November and, before that, in 2008.
Likewise, when it’s around the 145-150 levels, the yen tips the cost-benefit balance for Japan too. Japan’s yen has weakened against the dollar so far this year significantly more than its regional counterparts.
The yuan has slid more than 4% against the dollar so far this year. One factor that might be worrying Chinese authorities, analysts say, is that the yuan’s value against its major trading partners has fallen 2.16% this year, according to Reuters calculations based on official data.
|
Meanwhile, as we wait to see when Japan intervenes, it helps to remember Japan always goes for big. Think September and October 2022, when it spent upwards of $60 billion as the yen fell to 32-year lows.
Those with short yen positions hoping to time a perfect trade need only look at the yen chart, and its 14 yen rally over 3 weeks for a tip.
|
/cloudfront-us-east-2.images.arcpublishing.com/reuters/AWEAKHAGNJKGFHXXAUVAUJKM3Y.jpg "China gets weary of a weakening yuan 42")
