BOJ Rate Hike Looms Amid Yen Intervention Fears
The possibility of yen-buying intervention by Japanese authorities is growing ahead of the Bank of Japan's (BOJ) September policy meeting and the subsequent Silver Week holiday. The BOJ has already locked in a rate increase on September 18, with some traders pricing in a larger move than expected.
Japan used a long holiday period in April to intervene in the foreign-exchange market for the first time this year, fueling speculation that officials could adopt a similar strategy again. The BOJ's rate decision and the Federal Reserve's policy meeting will also influence yen volatility, with some investors fearing a sharp slide if the BOJ delivers less tightening than markets expect.
Japanese Finance Minister Satsuki Katayama and US Treasury Secretary Scott Bessent have said they are ready to step back into the market without hesitation if needed. The dollar-yen exchange rate reaching 160 would be seen as a high probability of intervention, according to Marito Ueda, president of SBI FX Trade.
The yen has stayed under pressure despite large-scale market intervention by Japanese authorities, with higher crude prices and a wide interest-rate gap with the US weighing on the currency. Speculative money is also returning to bets on yen weakness, with hedge funds building bearish positions again.