Traders are increasingly skeptical that Japan’s new government will be able to shore up the yen by direct intervention as the currency slumps toward levels that previously drew authorities into the market.
Unlike last year, when intervention took place in the run-up to higher interest rates by the central bank, this time around Japan would be buying yen just as Prime Minister Sanae Takaichi signals her desire for a slowdown in rate hikes.
Officials would also be wading into the market when Takaichi’s plans to boost spending are fueling the yen’s weakness. Additionally, any intervention would risk depleting Japan’s foreign exchange reserves needed to help fund a U.S. investment package to placate U.S. President Donald Trump.
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