USD/JPY Plummets Below 158 Amid Speculation of Japanese Intervention

The USD/JPY exchange rate plummeted on Thursday, falling from near 164 to below 158 before recovering above 160 in Asian trading. The move came amid speculation that Japanese authorities had intervened in the currency market ahead of the Bank of Japan meeting.

MUFG expects the USD/JPY to move back below 160 over time, with suspected intervention and faster Bank of Japan rate hikes increasing the risks for Dollar buyers.

US Treasury Secretary Scott Bessent added pressure by describing the Yen as 'very undervalued', while Japan's top currency official Atsushi Mimura acknowledged concerns over the recent weakness without commenting directly on intervention.

MUFG remains cautious on the pair heading into the weekend, particularly with speculative positioning still heavily tilted against the Yen. The bank believes authorities may be looking to flush out these positions, but notes that intervention alone will not produce a lasting reversal.