Atsushi Takeuchi, who headed the Bank of Japan's foreign exchange division when Tokyo intervened back in 2010-2012, said that the government is likely to continue to intervene in the foreign exchange market until the risk that speculators will provoke a free fall of the national currency is eliminated.
The yen rose sharply at the beginning of the week, which was caused by the alleged intervention of the Japanese authorities. But official data that will show whether the intervention was actually carried out will be available only at the end of May. While some market participants were targeting the 160 yen per dollar level as a possible trigger for intervention, analysts said that the Japanese authorities may not be targeting specific levels. Earlier today, the yen jumped again on what traders suspect was the second day of intervention following such action on Monday. Currently, the USD/JPY is trading at 155.22 (+0.49%), compared with the session low of 153.03. Since the beginning of 2024, the USD/JPY has grown by more than 10% as traders revised expectations regarding the timing of the Fed's first rate cut, while the Bank of Japan made it clear that further policy tightening would be slow after the first rate hike since 2007 in March.
Commenting on the sharp fall of the yen on Monday (USD/JPY reached 160.20) and the subsequent rally of the currency against the background of possible intervention, Takeuchi warned that "if you ignore a sudden 2-3 yen move in a single day, you risk triggering a yen free fall that heightens anxiety over the yen and the broader economy". He added that by intervening during periods of a sharp fall in the yen, the authorities can maximize the psychological impact by keeping traders on guard against the possibility of further action.