What Will Happen If Japan's Yen Falls To 140 Against The Dollar?

With the Japanese Yen slowly inching toward the psychological mark of 140 against the dollar, experts believe there could be some sort of “verbal intervention”.

Key Level: Data compiled by Bloomberg stated that a gauge of the yen’s implied volatility from the options market indicated about a 51% chance the currency will hit 140 within a week.

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In the late 90s, the Japanese government intervened to boost the yen when it breached the 140 level.

A Bloomberg report cited David Lu, director at NBC Financial Markets Asia in Hong Kong saying there is a likelihood of some sort of verbal intervention as the 140 level approaches. “But an actual intervention is likely to be ineffective at this point where the dollar is rising broadly on US monetary policy prospects while there is no support for the yen from the Bank of Japan,” Lu said according to the report.

Yen’s Movement: With the Federal Reserve officials maintaining their hawkish commentary at a time when Japan continues to maintain its easy monetary policy, the Yen fell from a level of 130.4 against the greenback in early August to as low as 139 on Monday.