Japan Readies Another Yen Intervention as BOJ Rate Hikes Loom

Japan's yen intervention is likely to continue in the near future, according to Mitsuhiro Furusawa, Tokyo's former top currency diplomat. Furusawa believes that the BOJ should raise interest rates faster than expected to stem the yen's decline.

The yen has fallen sharply since its joint intervention with Washington last month, hitting a low of 163.99 before being driven up to around 155.20 per dollar. However, it has since slid back to around 159.50.

Furusawa thinks that the BOJ should raise rates to around 1.5% to 1.75%, citing Japan's neutral rate as a guide. He also predicts that the next rate hike will likely come in December or January, followed by another hike sometime in the next fiscal year beginning in April 2027.

Furusawa believes that intervention only buys time and that more fundamental steps are needed to reverse the yen's downtrend. He thinks that faster rate hikes by the BOJ are necessary to stem the currency's falls and hurt the economy.