Timing the BOJ's next intervention?

8 мая

We have seen 2 interventions from the BOJ over the past 2 weeks.

The first came when the USDJPY hit between 158.000 and 160.000 and the second when it hit almost 158.000.

With the BOJ warning that it is ready and willing to step in again, how smart is it to try to catch the ride down if or when the BOJ steps in again?

Finance Minister Shunich Suzuki reiterated the authorities' readiness to counter excessive foreign exchange fluctuations.

At the same time, Bank of Japan Governor Kazuo Ueda expressed intent to assess yen movements' impact on inflation for guiding policy decisions. "Foreign exchange rates make a significant impact on the economy and inflation,” Ueda underscored in response to questions in parliament yesterday. But this is perhaps a slightly different story, but still, something for traders to consider.

Last week, BOJ data suggested it had spent $60 billion to defend the yen.

But all this has done, according to some analysts, is buy the Japanese authorities time, with the USDJPY steadily climbing back to intervention levels (given the substantial interest rate difference between Japan and the US).

But can we expect the BOJ to intervene again and again?

US Treasury Secretary Janet Yellen emphasized interventions should be infrequent and ideally coordinated with the broader central banking community, or at least signaled in advance. So, the BOJ will be wary of its international reputation too.