Morgan Chase: There is or will be limited space for further coffer intervention in Japan

On 31 July, Jorgan Chase strategist Junya Tanase stated that the Japanese authorities’ choice to intervene in the market prior to the policy resolution of the Central Bank of Japan on 31 July pre-empted the release of the dove-like tone or would trigger a new Yen sale. At this stage, it is difficult to send a clear signal about the pace of the rate hike, and the market has largely absorbed the October hike. “There is a risk that this policy communication will be interpreted by the market as a dove-like tendency.” If the authorities do intervene, the intervention could be of a considerable scale, or it would have exceeded the 15 trillion yen (US$ 94 billion) in 2024. “If foreign exchange reserves fall further, the reliance on reserve management means it is difficult to return to their original levels, which means that there is limited scope for additional follow-up intervention.” Recent official statements have referred to the use of the Government Pension Investment Fund to curb the Japanese yen ' s weakness and to curb the upward return on Japanese debt. This suggests that policymakers have begun to consider alternative policy tools as the space for market intervention continues to shrink. "The New Wave"