The yen is expected to temporarily lose direction following coordinated intervention by Japan and the United States, but many believe the yen's depreciation trend against the US dollar itself will continue. The next focus is the Bank of Japan's policy meeting.
The possibility has been raised that coordinated intervention spanning Japan and the United States was carried out from Thursday through Friday last weekend, reportedly with the aim of curbing turmoil in the yen market. A notable feature of this intervention is said to be US cooperation, with many believing that it was intended to restrain the selling of yen and buying of US dollars.
The intervention is estimated to have been on the order of ¥11.7 trillion, and is said to have been potentially comparable to or larger than the intervention during Golden Week. The United States was involved rather than Japan acting alone, and it has been suggested that the effort was intended to curb the rise in long-term interest rates and the expansion of the trade deficit.
Many believe the intervention's effects will be temporary and will not lead to a long-term trend reversal, while the finance authorities indicated a policy of securing dollar funding through the FIMA Repo Facility. This was intended to avoid selling US Treasuries, but some believe that the need to sell US Treasuries will arise again when the funds are repaid.
The Bank of Japan's stance will be important for developments ahead, with its next Monetary Policy Meeting scheduled for 17–18 September. As intergovernmental investment commitments and the overseas outflow of individual funds also weigh on the yen, the yen's direction is expected to depend on how the Bank of Japan assesses the pace of interest-rate hikes.