Yen traders are bracing themselves for a redux of September 2022, when Japan intervened in the market to prop up the ailing currency in the wake of a central bank decision that reaffirmed accommodative monetary policy.
With the yen already much weaker than it was then, and U.S. interest rates unlikely to come down anytime soon, the mere lack of any hawkish comments from Bank of Japan Gov. Kazuo Ueda on Friday may be enough to push the currency toward a possible inflection point. Based on an analysis of comments from the Masato Kanda, the top currency official at the Finance Ministry, ¥157.60 versus the dollar is one key level to watch.
There has been no sign yet of yen purchases by the ministry, even as the currency continues its slide and on Wednesday trading in London broke beyond ¥155 per dollar for the first time in more than three decades. But the situation could change very quickly, with a host of potential triggers for a sharp drop in the yen and action from authorities in Tokyo.