The yen rose suddenly on Friday, and the biggest question traders are concerned about is whether the government will fulfill its call to redirect the country's huge pension funds back to domestic investment. Without this change, the yen seems likely to fall to a new low in 40 years, as the global interest rate environment is becoming more and more favorable to the US dollar. Although the risk of official intervention remains, given the government's record purchase of yen earlier this year, many market participants are skeptical about the effects of official intervention. The exchange rate of the yen rose 0.7% against the US dollar to 161.29, temporarily reversing the weak trend. Earlier, Japan's Finance Minister Katayama Satsuki called for pension funds to invest more in domestic financial assets. “This story could completely change the narrative,” said Bart Wakabayashi, Tokyo branch manager at State Street Bank, “but it's just a stress response. The sustainability of further purchases of yen needs to be supported by a stronger commitment.”

The yen rose suddenly on Friday, and the biggest question traders are concerned about is whether the government will fulfill its call to redirect the country's huge pension funds back to domestic investment. Without this change, the yen seems likely to fall to a new low in 40 years, as the global interest rate environment is becoming more and more favorable to the US dollar. Although the risk of official intervention remains, given the government's record purchase of yen earlier this year, many market participants are skeptical about the effects of official intervention. The exchange rate of the yen rose 0.7% against the US dollar to 161.29, temporarily reversing the weak trend. Earlier, Japan's Finance Minister Katayama Satsuki called for pension funds to invest more in domestic financial assets. “This story could completely change the narrative,” said Bart Wakabayashi, Tokyo branch manager at State Street Bank, “but it's just a stress response. The sustainability of further purchases of yen needs to be supported by a stronger commitment.”