DBS Bank’s Philip Wee highlights that USD/JPY is trading around 160, a level where intervention risk remains high. He notes US Treasury comments on excessive volatility, Japan’s Finance Ministry readiness to act, and expectations for a 25 bps Bank of Japan hike to 1% in June as key factors shaping Japanese Yen dynamics in the near term.

Authorities signal readiness to act

“For now, intervention risks remain high for USD/JPY around 160.”

“US Treasury Secretary Scott Bessent explicitly characterized “excessive exchange-rate volatility” as undesirable, which Tokyo has interpreted as tacit approval to avert an unchecked fall in the JPY.”

“The Bank of Japan will need to support the Ministry of Finance by affirming the 25bps hike to 1% that the market has priced in for its June 16 meeting.”

“Finance Minister Satsuki Katayama warned this morning that the authorities were ready to respond to forex as necessary at any time, adding that BOJ Governor Kazuo Ueda shared many of the same views.”

“Speaking later today, Ueda will likely reinforce his recent comment that the global oil price shock was broad and consistent, emphasizing the need to prevent the JPY’s prolonged weakness from feeding into core inflation expectations and corporate price-setting behaviour.”

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