Citi Sees Japan Yen Intervention at 160 Per Dollar Threshold

Citi has forecasted that Japan's Ministry of Finance may intervene to bolster the yen if it weakens further against the US dollar. The firm noted that the Japanese government's stance on deflation will be crucial in determining the direction of interest rates and, consequently, the value of the yen.

Citi stated that the ministry might aim to push the exchange rate down to around 150 per dollar if they decide to intervene. This comes after recent rate checks implemented by the Bank of Japan occurred when the yen was stronger than during the previous intervention.

The Takaichi government's Cabinet reshuffle did not hold any major surprises, according to Citi. However, the firm believes that the key will be how the government's stance on deflation changes in the Monthly Economic Report published by the Cabinet Office.