The Japanese yen has risen approximately 3% against the US dollar over 2 days, but it remains unclear whether intervention took place. Expectations of monetary tightening by the Bank of Japan and developments at GPIF could support the yen.
The Japanese yen has risen approximately 3% against the US dollar, but it remains uncertain whether the move will last, and no clear evidence has been confirmed of new yen-buying intervention by the government or the Bank of Japan. The market move is seen as consistent with a "rate check," with no signs of the kind of sharp move seen during past interventions.
A series of comments suggesting that the Bank of Japan is considering monetary tightening has led markets to price in a higher probability of a rate hike this year. Expectations have emerged that the BOJ could raise rates twice by 25 basis points each before the end of the year.
Reports that GPIF may change its portfolio to increase its allocation to domestic assets could also support the yen.
Some observers believe the sustainability of intervention will be limited and that it will not alter the yen's fundamental drivers. The yen's resilience will depend on GPIF's moves and BOJ policy. Scenarios that could become more realistic from 2027 onward have also been identified.