Former Japanese Finance Official Warns Yen "Clearly Weak," Intervention May Recur; Market Expects Bank of Japan (BOJ) September Rate Hike to 76%
Former Japanese Vice Minister of Finance for International Affairs, Mitsuhiro Furusawa, stated on Thursday that the current USD/JPY exchange rate, around 159.50, has fallen back from the 155.20 level it reached after previous interventions. If it returns to the levels seen before last month's joint intervention, Japan and the U.S. might intervene again. He emphasized that intervention can only "buy time," and the Bank of Japan (BOJ) should accelerate its pace of interest rate hikes and communicate the possibility of faster rate hikes in the future, with the policy rate eventually expected to rise to 1.5% to 1.75%. According to Tokyo Tanshi data, the market's expected probability of a Bank of Japan (BOJ) rate hike in September has surged to 76% from 24% on July 30. Goldman Sachs warned that if the Bank of Japan (BOJ) accelerates its tightening pace, there is still room for further unwinding of yen carry trades, and the related spillover effects could impact global equity, bond, and foreign exchange markets.
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