Furusawa: Japan May Intervene in Yen Again, But Only a Temporary Fix
Japan's government may intervene in the yen again to prop up its value, but this would only be a temporary measure, according to Mitsuhiro Furusawa, a former senior Japanese official and President of the Institute for Global Financial Affairs at Sumitomo Mitsui Banking Corporation (SMBC).
The yen has weakened again after a joint intervention by Japan and the US last month pushed its value up from 163.99 yen per US dollar to around 155.20 yen per US dollar.
Furusawa said that while intervention may not be specifically at a level, for example, 160 or 162 yen per US dollar, it could happen again at any time, including through joint action with the US.
To reverse the yen's weakening trend, Furusawa believes Japan needs more fundamental policies, one of which is to accelerate interest rate hikes by the Bank of Japan (BOJ).
The BOJ has raised interest rates about twice a year since ending its massive stimulus policies in 2024 and currently has an interest rate of 1%, the highest in 31 years.
Furusawa estimates the BOJ wants to raise interest rates to around 1.5%-1.75% and expects the next hike after September to be in December or January, followed by another hike in April 2027 if the economy remains on track.