Live Markets: Yen intervention returns to 2025 bingo card
10/01/2025 11:00
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YEN INTERVENTION RETURNS TO 2025 BINGO CARD
The yen remains under pressure, this week hitting its weakest against the dollar since July,
bringing the prospect of currency intervention back into view.
Japan's finance minister Katsunobu Kato issued a fresh warning this week against speculative
yen selling.
According to Citi analysts, if the currency continues to weaken, the government will likely
intervene to buy the yen somewhere between 160-165 per dollar. It was last at 157.87 per dollar
JPY=EBS .
"In particular, we think the high last year of around ¥162/$ could be important," Citi
writes, noting that was the high level in 2024 when authorities last intervened to strengthen
the currency.
But, Citi expects Japanese authorities to prioritise the normalisation of monetary policy
over forex intervention by the MoF.
"If intervention to buy the JPY results in rapid JPY appreciation, as it did last summer,
then the BoJ may miss the opportunity for its next rate hike," Citi says.
Incoming U.S. President Donald Trump remains a risk too.
"With the second Trump administration soon to start, the MoF may want to avoid unnecessary
but obvious action in currency policy," Citi says, noting that Trump could accuse Japan of
deliberately weakening the yen and ramp up trade tensions.
"The equivocation by Governor Ueda, whose stance was hawkish as recently as the October
meeting, could well indicate a high degree of caution regarding possible Trump tariffs," Citi
adds.
(Samuel Indyk)
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