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MUFG’s Lee Hardman notes that the Japanese Yen has weakened modestly in Asia, with USD/JPY near its 200‑day moving average around 158.00 after recent joint intervention by Japan and the US. Japan is estimated to have bought close to USD 87 billion of Yen, while US participation is smaller but symbolically important. MUFG expects US intervention to remain limited and stresses that fundamental changes, including faster BoJ normalization, are needed for a sustained Yen recovery.
Joint action limits speculative yen pressure
“The yen has weakened modestly during the Asian trading session resulting in USD/JPY rising back up to within touching distance of the 200-day moving average at around 158.00 after hitting a low yesterday at 157.18.”
“On balance, we expect US intervention to support the yen to remain relatively small in scale.”
“While joint intervention may prove more effective at helping to provide support for the yen in the near-term, we still believe that it can only buy time.”
“There will need to be a change in fundamentals as well to encourage a sustainable reversal of the yen weakening trend that has been in place over the last five years.”
“More US pressure on Japan to allow a faster pace of BoJ policy normalization as part of the joint intervention arrangement would an important step to help reverse yen weakness.”
