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Japan intervenes to support the yen, BoJ keeps rates unchanged
Commerzbank analyst Volkmar Baur said the MoF intervention, with apparent US Treasury support, is unlikely to stop renewed yen weakness because the trigger level for intervention is shifting toward a weaker yen.
Japan’s Ministry of Finance intervened in foreign exchange markets to address a weak yen, according to Commerzbank’s Volkmar Baur, who added that the move appeared to include support from the US Treasury.
Baur said the intervention came as Tokyo inflation stabilized around 2% with upside risks, but noted that the Bank of Japan left its key interest rate unchanged and only provided hints of a potentially more hawkish stance.
He argued the BoJ’s cautious approach was insufficient to change market expectations, and said yen weakness could return in the coming days and weeks despite the government’s willingness to step in.
Baur also said the yen exchange rate level that triggers intervention appears to be shifting higher over time, implying less room for the policy to prevent further weakness in the near term.