Core Viewpoint - HSBC's multiverse model suggests that the reasonable valuation for USD/JPY is between 146 and 152, but warns that various political, macroeconomic, and policy changes could trigger a rebound in the yen [1] Group 1: Factors Influencing Yen Rebound - Key factors for potential yen appreciation include a US-Japan trade agreement, the Federal Reserve restarting easing policies, or direct intervention in the foreign exchange market by Japan [1] - A US-Japan trade agreement with lower-than-expected tariffs could alleviate fiscal concerns and reignite expectations for Bank of Japan rate hikes, providing upward potential for the yen [1] - The anticipated Federal Reserve rate cut in September also poses an upside risk for the yen [1] Group 2: Intervention Thresholds - If the USD/JPY exchange rate falls between 155 and 160, it may trigger foreign exchange intervention by the Japanese Ministry of Finance [1] - Due to US scrutiny over currency manipulation, the threshold for such intervention may have been lowered [1]

Core Viewpoint - The Governor of Bank Indonesia, Warjiyo, stated that the central bank will continue to implement foreign exchange interventions in the offshore market next year to manage the exchange rate of the Indonesian Rupiah [1] Group 1 - The central bank's strategy aims to stabilize the Indonesian Rupiah amid market fluctuations [1] - Continued foreign exchange interventions are expected to support the currency's value against external pressures [1]

Core Viewpoint - The Danish central bank did not conduct any foreign exchange interventions last month [1] Group 1 - The absence of foreign exchange interventions indicates a stable currency environment in Denmark [1]

Core Viewpoint - The Bank of Korea has engaged in net selling of $2.96 billion in the first quarter to curb the depreciation of the Korean won, following a net selling of $3.76 billion in the previous quarter [1] Group 1 - The net selling in the first quarter was $2.96 billion [1] - The previous quarter's net selling was $3.76 billion [1] - The actions taken by the Bank of Korea are aimed at stabilizing the currency [1]

Core Viewpoint - The Swiss National Bank (SNB) Governor stated that foreign exchange interventions are primarily focused on the most liquid markets, specifically the US dollar and euro markets [1] Group 1 - The SNB emphasizes the importance of liquidity in foreign exchange interventions [1] - The US dollar and euro are identified as the main currencies for intervention activities [1]

Core Viewpoint - The monetary policy authority in Taiwan has received recommendations from the United States to conduct foreign exchange interventions in a limited manner, allowing the exchange rate movements to reflect the economic fundamentals [1] Group 1 - The U.S. suggests that Taiwan's foreign exchange interventions should be restrained [1] - The emphasis is on allowing the exchange rate to mirror the underlying economic conditions [1]

Core Viewpoint - The significant appreciation of the Swiss Franc is creating deflationary pressures in Switzerland, complicating the Swiss National Bank's (SNB) ability to intervene due to the current U.S. administration's stance [1][3][4]. Group 1: Economic Impact - The Swiss Franc has appreciated over 10% against the U.S. dollar since the beginning of the year, driven by global market volatility and a flight to safety [3][4]. - The strong Swiss Franc has led to a decrease in import prices, contributing to a 2.4% year-on-year decline in import prices and a 0.1% decrease in the Consumer Price Index (CPI) in May, marking Switzerland's first return to deflation since the pandemic [3][4]. Group 2: Central Bank Response - The SNB may be forced to consider reintroducing negative interest rates as a response to the strong Swiss Franc, which could further lower the key interest rate by 25 basis points to -0.25% by the end of the year [5][6]. - The SNB ended its seven-year negative interest rate policy in 2022, but the current economic conditions may necessitate a reconsideration of this stance [5][6]. Group 3: Foreign Exchange Intervention Challenges - The SNB's ability to intervene in the foreign exchange market is complicated by the U.S. government's potential response, as any direct intervention could lead to accusations of currency manipulation, reminiscent of the 2020 designation by the U.S. Treasury [6][7]. - The current geopolitical climate and the U.S. administration's trade policies make it difficult for the SNB to utilize foreign exchange interventions without facing significant repercussions [6][7].

Group 1 - The Japanese Ministry of Finance reported that the amount of foreign exchange intervention from April 28 to May 28 was zero [1]

Core Viewpoint - Japan's Finance Minister, Kato Katsunobu, emphasizes the importance of holding sufficient foreign exchange reserves to respond to rapid fluctuations in exchange rates [1] Summary by Relevant Categories Foreign Exchange Reserves - Japan's current level of foreign exchange reserves is not excessive [1] - Following foreign exchange interventions, there has been a significant reduction in foreign exchange reserves [1]

Group 1 - The Hong Kong Monetary Authority (HKMA) continues to buy US dollars to defend the currency peg, injecting HKD 60.543 billion due to the prolonged strong side of the peg at 7.75 against the USD [2] - Since last Friday, the HKMA has absorbed USD 7.812 billion in sell orders, raising the banking system's balance to HKD 161.384 billion [2] - The HKMA's total injections since last week amount to HKD 116.614 billion, with the recent interventions attributed to the weakening USD and concerns over trade agreements [2] Group 2 - The New Taiwan Dollar (TWD) experienced its largest increase since 1988, rising by 5% on Monday, prompting local authorities to address speculation about the currency's surge [3] - Taiwan's trade negotiation office clarified that the US did not request the TWD to appreciate, and recent negotiations did not involve foreign exchange policy [4] - Concerns among local exporters regarding the TWD's strength are rising, particularly affecting companies like TSMC, which saw a 1.3% drop in stock price [4] Group 3 - Taiwanese insurance companies hold approximately TWD 575 billion in US government bonds, with many lacking adequate hedging against a weakening USD, leading to potential losses [5] - The recent surge in TWD has led to a significant increase in trading volume, reaching the highest levels since the 2008 financial crisis [4] - Taiwan has been placed on the US Treasury's currency monitoring list, and the TWD's appreciation may be viewed as a bargaining chip in trade negotiations [8]