Here’s how to choose a number for a USD/JPY intervention (and also how the intervention will take place)

A number of figures continue to indicate that the Japanese Finance Ministry is expected to ask the Bank of Japan to intervene to support the yen.

152.00 was widely touted as the line in the sand, but the US CPI winds blew away that sand.

Rabobank says the Ministry of Finance does not want to move to 155 and plans:

• 150 and 148 over 1 and 3 month horizons

Bank of America says a delay in easing from the Federal Open Market Committee (FOMC) puts the risk of USD/JPY rising to 160, and adds that if USD/JPY moves to 155 without some sort of catalyst, it would prompt intervention.

Greg posted:

• Nomura says that: despite a particularly masked reaction from officials since late March when the yen was hovering above the 152 level, “nothing says they are going to intervene anytime soon.”
• Mitsubishi Trust in the banking sector added: The JPY fell below 152 in one fell swoop, so intervention could well happen at any time.

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Sure, go ahead and play the pick a number game if you want. An alternative is to know what to watch for for signs of impending intervention. I have a guide to these items here:

• The 4 things to watch before the Bank of Japan intervenes on the yen on the foreign exchange market

The TL;DR right now is that we’re not close yet.

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If you are curious about the intervention mechanisms and why you should monitor the Ministry of Finance rather than the BOj:

• The Ministry of Finance (MOF) of Japan is responsible for formulating the country’s foreign exchange policy, while the Bank of Japan (BOJ) is responsible for executing these policies, particularly in terms of foreign exchange intervention. exchange.
• The MOF can decide to intervene in the foreign exchange market if it considers (in the current situation) that the yen is too weak. Once the MOF decides to intervene, it issues instructions to the BOJ. The BOJ then conducts operations in the foreign exchange market by purchasing (under current circumstances) yen. The special account of the Foreign Exchange Fund (FEFSA), which falls under the jurisdiction of the MOF, is used for interventions. You will notice that in the current situation, where the BOJ would buy yen, it would draw on US dollar reserves to finance the other side of the transaction, buying US dollars (or other currencies if necessary).
• The BOJ’s operations are generally conducted through commercial banks that trade in the foreign exchange market. These may be spot transactions or futures transactions that are expected to take place at a later date. It should be noted that while the Finance Ministry has the ultimate authority to decide when to intervene, it does so in close consultation with the BOJ. The BOJ provides expertise and advice on currency and financial market conditions, which may influence the MOF’s decision. This collaboration reflects the balance between the roles of the two entities: the MOF as the government’s main financial and economic advisor, and the BOJ as the country’s central bank that maintains the stability of the financial system.