The CHF/JPY currency pair held close to a fresh 8-week low of 198.72 on Wednesday, as rising expectations of BoJ policy normalization and the threat of direct intervention by Japanese authorities have lent support to the Japanese Yen.
On Monday, Finance Minister Satsuki Katayama said that officials were prepared to respond appropriately to currency fluctuations at any time. Those remarks were reinforced on Tuesday when Chief Cabinet Secretary Minoru Kihara reiterated that the government would take decisive action against volatile foreign exchange moves if necessary.
This kept market participants alert to the possibility of official Yen-buying operations.
The Bank of Japan’s Summary of Opinions from its June meeting showed that most board members favored raising the policy rate. They highlighted that inflation risks were rising and that the underlying CPI was steadily moving toward the 2% objective.
On the Swiss side, the Swiss National Bank left its policy rate unchanged at 0% at its June meeting, marking the fourth consecutive decision to hold rates steady. The SNB reiterated that this stance was consistent with supporting both price stability and economic growth.
However, the central bank raised its inflation forecast and stressed that it remained prepared to step into the foreign exchange market to counter excessive Swiss Franc strength.
The CHF/JPY currency pair was last down 0.23% on the day to trade at 198.96.
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