As the Bank of Japan holds a monetary policy meeting, the yen exchange rate approaches the level of possible intervention

Yen traders are preparing for a repeat of September 2022.

At that time, Japan intervened in the market to support the weak yen after the Bank of Japan reiterated its loose monetary policy.

Given that the yen is already much weaker than it was back then, and that U.S. interest rates are unlikely to fall anytime soon, the mere lack of hawkish comments from Bank of Japan Governor Kazuo Ueda as of Friday may be enough to push the yen toward a turning point .

According to an analysis of the remarks of Finance Minister Makoto Kanda, the top foreign exchange official at the Ministry of Finance, 1 US dollar to 157.60 yen is a key level worthy of attention for the yen exchange rate.

Although the yen continues to fall and broke above 155 yen per dollar on Wednesday, breaking through this level for the first time in more than 30 years, there is currently no sign that the Ministry of Finance is buying the yen.

But the situation could change quickly, with a range of factors potentially triggering a sharp fall in the yen and spurring action in Tokyo.

Traders will be on high alert, watching closely for the Bank of Japan\’s policy statement and forecasts around noon on Friday, followed by Kazuo Ueda\’s afternoon press conference and the release of data on the Fed\’s favored inflation gauge.

In addition, there will be public holidays in Japan on Monday and Friday next week, and the thin market trading brings risks that are prone to fluctuations.

Shoki Omori, chief trading strategist at Mizuho Securities in Tokyo, said that looking back at 2022, the intervention did have an impact, putting pressure on those holding short yen positions until the dollar resumed its upward trend against the yen.

“The spread is too wide and investors will continue to be motivated to go long on the pair.

\”He said.

Kanda said last month that the 4% depreciation of the yen in two weeks did not reflect fundamentals and was unusual.

That threshold would be reached if the yen weakened to around 157.60 yen, according to data compiled.

The yen extended its losses at 15:53 ​​Tokyo time on Thursday, trading at 155.62 yen per US dollar.

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