Japanese Yen's Intervention Credibility in Question as USD/JPY Grinds Higher

The Japanese Yen's recent intervention has raised questions about its credibility as an effective tool. According to BNY, the USD/JPY pair is grinding higher again, with the JPY having surrendered most of its gains. A break above 160 would put intense pressure on authorities to adjust their policy if a stronger JPY is truly desired.

BNY's Geoff Yu and David Tam argue that failure to follow through on intervention undermines its credibility. They warn that every tick higher in USD/JPY will continue to erode policy credibility.

U.S. Treasury Secretary Scott Bessent acknowledged that the joint action was only a 'signal', emphasizing the need for Tokyo to follow through. Authorities face increasing pressure above 160, which would likely lead to JPY losses and add to calls for a policy change.