Japanese authorities, while reluctant to act now, may consider engaging in a rare intervention to stem yen rises against the euro if the moves appear to be driven by speculators and sharp enough to severely hurt business sentiment.
If they were to act, authorities will step directly into the euro-yen market despite its low trading volume and may twin it with dollar-yen intervention to maximize the effect, say sources with direct knowledge of government tactics and market players.
"Technically it's possible. People talk about the euro-yen market being too small, but that's not an obstacle," said a policymaker with direct knowledge of the matter. Another source expressed a similar view. Both declined to be named due to the sensitivity of the subject. (Reuters)
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