Sept. 28 (Bloomberg) -- Bets that Japanese officials will intervene to weaken their currency against the dollar are “likely misplaced,” according to Citigroup Inc.
A narrow trading range over the past eight days indicates markets are anticipating action to depreciate the yen, Todd Elmer, Singapore-based head of Group-of-10 currency strategy for Asia excluding Japan, wrote today in a note to clients.
“This exceptionally narrow range belies continued market nervousness on potential intervention,” Elmer wrote. This is unlikely as “international opposition presents a barrier to Japanese intervention and domestic conditions look less conducive to action than was the case earlier this year.”
The new administration of Prime Minister Yoshihiko Noda is more popular than that of Naoto Kan, meaning it is less likely to resort to currency intervention to gain support, Elmer wrote.
The yen strengthened 0.4 percent to 76.47 per dollar at 3:46 p.m. in London. It has climbed 5.4 percent versus the greenback this quarter.
--Editors: Nicholas Reynolds
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