Estimates reveal that the Bank of Japan (BoJ) spent approximately $55 billion last week to support the yen. This amount matches the $60 billion intervention in September-October 2022, which led to a significant depreciation of the USD/JPY pair. The BoJ’s actions, coupled with the Finance Ministry’s strong stance against excessive yen weakness, have influenced market risk perceptions.
The BoJ’s significant presence likely prevented traders from pushing the USD/JPY above 160, despite the dollar’s ongoing strength. Additionally, recent dovish signals from the Federal Reserve have tempered expectations of a continuously strengthening greenback.
By defending the yen’s levels vigorously, authorities are signaling that challenging the current USD/JPY rates could result in further substantial intervention. As a result, the market has adopted a cautious approach to trading around this currency pair.
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