160 Credible Deterrent Level for USD/JPY Intervention

Japanese Yen's recent weakness and Bank of Japan (BoJ) communication about a possible rate hike have not revived foreign demand for Japanese assets, according to Geoff Yu at BNY. The USD/JPY exchange rate has been on a near-unbroken run from 155 to 164 between May and July, but generated very little impact on cross-border asset interest.

Yu highlights that the level of 160 in USD/JPY has become a credible deterrent for FX participants, even without clear evidence of official intervention. This is the first sign that the 160 level has been established as a credible deterrence level for FX market participants, based on official BoJ data.

FY-specific risk, such as recent moves in the JPY exchange rate, don't add to risks on the margins. U.S. Treasury Secretary Scott Bessent stated after the July round of intervention that any activity wouldn't be to the detriment of the U.S. Treasury market.