US-Japan Intervention Temporarily Halts Yen Depreciation
A coordinated intervention between the US and Japan is expected to temporarily halt the depreciation of the yen. According to Oxford Economics, this joint effort will likely have a longer-lasting effect compared to past unilateral interventions but still won't reverse the trend of yen weakness.
The research briefing from Oxford Economics assumes that the yen's path in the coming months will be slightly stronger, but maintains its forecast for year-end and 2027. Despite rising market speculation about faster rate hikes by the Bank of Japan, the central bank is expected to wait until December due to the intervention reducing the risk of a sharp yen depreciation.
The Middle East conflict and past rate hikes are also factors that will be assessed by the BoJ before making any further decisions. This coordinated effort aims to mitigate the risks associated with a weak yen, which could have far-reaching consequences for the global economy.