The Bank of Japan is the authority in Japan that would undertake yen intervention in the forex market, on instructions from the Ministry of Finance.
MUFG nominate a level to watch:
We expect the possibility of government intervention in the forex market to stop the yen from weakening will come into view if the USD/JPY passes 140. The last time Japanese authorities conducted yen-buying intervention was in June 1998, when the USD/JPY was above 140. The USD/JPY has been driven higher by the interest rate differential between Japan and the US. Now that this driver has started to lose momentum, we think growing concerns about intervention should act as an automatic brake on upside when the USD/JPY passes 140.
MUFG says 140 is in sight given "the Fed's unwaveringly hawkish stance should keep the dollar strong in the near term. However, the possibility of recession in the US could constrain a further widening of the interest rate differential between Japan and the US, which has been driving the USD/JPY's rise. We expect the USD/JPY's current rise to peak in Jul–Sep due to a slowdown in the US economy.”
Analysts at the bank forecast
- 135 at the end of Q3
- 131.00 for the end of the year
