There is a view that Japan could move to conduct a third currency intervention in a scenario where yen depreciation advances to around ¥163. While some expect the next intervention to take place after a Bank of Japan policy meeting, others have pointed to the possibility that it could be delayed until October or later, depending on the conditions surrounding discussions on a consumption tax cut in an extraordinary Diet session.
There is a view that Japan is likely to intervene if yen depreciation brings the exchange rate close to ¥163, but opinions are divided over whether the United States will intervene. Some have also pointed out that the impact could be limited if the United States continues intervening by selling euros.
The period most widely expected for the next intervention is after the announcement of the Bank of Japan's monetary policy meeting on 18 September. It is unclear whether a narrowing of the Japan-US interest rate differential will be a precondition for intervention, and there is uncertainty over whether the yen will actually turn higher.
If discussions on a consumption tax cut in an extraordinary Diet session become a precondition, it will be necessary to curb persistently high long-term interest rates while clarifying the funding source. In that case, the third intervention could take place from October onward.
As a historical precedent, the G7 intervention in September 2000 resulted in a coordinated intervention to buy euros, in an attempt to prevent the euro from weakening. The possibility of coordinated G7 intervention this autumn is also being discussed.