Furusawa: Yen Intervention Can Happen at Any Time, BOJ to Hike Rates Again

Mitsuhiro Furusawa, Japan's former top currency diplomat and now president of Sumitomo Mitsui Banking Corp's Institute for Global Financial Affairs, warned that yen intervention could happen at any time, not just when it reaches a specific level like 160 or 162 per dollar. He emphasized that the BOJ isn't done hiking rates either.

Furusawa told Reuters that Japan and the US could conduct joint intervention again if the yen returns to levels seen before last month's coordinated action, which drove the currency up to around 155.20 per dollar from a 40-year low of 163.99. However, he stressed that intervention alone only buys time, with more fundamental steps needed to reverse the yen's downtrend on a durable basis.

Furusawa expects the BOJ to raise rates in September and further hikes are likely to follow in December or January. He estimated that the BOJ ultimately wants to raise rates to around 1.5% to 1.75%, based on its own estimate of Japan's neutral rate, which sits between 1.1% and 2.5%. The BOJ could also hike again in April 2027 if growth holds up.