IMF: Yen's recent declines are driven by fundamentals, criteria not met for intervention

<p>Alongside the surge in USD/JPY Japanese authorities have insisted, over and over again, that the rate should trade in a stable fashion 'driven by fundamentals'. And over and over again the market has insisted that a 500+ or so bp differential between US and Japanese rates are a solid fundamental.</p><p>The IMF have weighed in, an official speaking on Saturday saying:</p><ul><li>"On the yen, our sense is that the exchange rate is driven pretty much by fundamentals. As long as interest rate differentials remain, the yen will continue to face pressure"</li></ul><p>Adding that the IMF assesses intervention in the FX market to be justified only when there is a severe dysfunction in the market, a heightening of financial stability risks, or a de-anchoring of inflation expectations:</p><ul><li>"I don't think any of the three considerations exist right now"</li></ul><p>The IMF is, of course, correct. The concern now is that once these folks recognise it maybe the trend is nearing completion. </p><p>But not before a more determined crack at taking the rate above 150 next week I'd suggest:</p><p>Join ForexLive on Monday and the market response to this.</p><p>ps.

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This article was written by Eamonn Sheridan at www.forexlive.com.