USD/JPY briefly plunged to the 155 range, bringing the possibility of additional yen-buying intervention and the durability of its effects into focus. Warnings from the Finance Minister and Vice Minister of Finance, as well as price movements before and after the intervention, have been reported.
USD/JPY fell as low as the 155 range. After the yen weakened following Japan-US policy events, it plunged on the evening of the 30th Japan time. Reports that government officials had acknowledged the intervention have also emerged, and the currency market is considered highly likely to have seen yen-buying intervention for the first time since July 2024. Goto Yujiro (後藤 祐二朗) of Nomura Securities said additional intervention could occur in the near term and that the yen is likely to face limited upside in the short term.
Finance Minister Katayama and Vice Minister of Finance Mimura issued strong warnings aimed at encouraging yen appreciation, suggesting that preparations for intervention were nearing completion. The market had anticipated intervention in the ¥161–¥163 range, but some view the intervention as having occurred somewhat earlier than expected ahead of Golden Week.
US cooperation, Bank of Japan policy and the situation in the Middle East will be key to assessing the medium- to long-term effects of the intervention. While the US Treasury has suggested that it may tolerate intervention while calling for coordinated operations, the possibility of a Bank of Japan rate hike in June will also have an impact. Depending on oil prices and developments in the Middle East, the risk of renewed volatility in both the yen appreciation and yen depreciation directions remains.
Japan holds US$1.3747 trillion in foreign-exchange reserves as a source of intervention funds. It is expected to be able to use a range of funding sources, including approximately US$161.7 billion in deposits, indicating that short-term intervention is feasible.