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Matthias Knab, Opalesque: Japan and the United States took the extraordinary step of intervening in currency markets together for the first time since 1998 this week, a coordinated action that Nigel Green, CEO of deVere Group, argues signals far deeper stress building beneath the surface of the global financial system than markets currently recognize.
Tokyo and Washington confirmed their joint yen-buying operation after the currency slid to roughly 164 per dollar last week - its weakest point in almost four decades - before rebounding sharply toward 156 following the intervention. Japan alone deployed an estimated $59 billion defending the yen on Thursday, with a further suspected move on Friday, before Monday's official confirmation sent the dollar tumbling roughly 1 percent against the currency.
Currency Crisis or Systemic Warning?
"Markets are treating this as a currency issue, but it's far bigger than that," Green comments. "When two of the world's largest economies step into the market together for the first time in over a decade, they're telling investors something about stress building beneath the surface of the global financial system, not just about an exchange rate."
The intervention carries particular weight because of what it reveals about official concern over interconnected asset markets. Each portfolio with meaningful exposure to Japanese equities, bonds or funding trades now requires careful reassessment, ac...................... To view our full article Click here
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