Estimates show the Bank of Japan (BoJ) spent around $55 billion last week to prop up the yen – matching the firepower of its $60 billion September-October 2022 intervention that triggered a notable USD/JPY depreciation. These outlays, backed by vocal Finance Ministry resolve to punish excessive yen weakness, have reshaped market risk assessments.
The Bank of Japan’s (BoJ’s) overwhelming presence likely deterred traders from pushing USD/JPY above 160, despite the continued strength of the dollar. Complementing this, recent dovish signals from the Fed tempered expectations of an ever-strengthening greenback.
With authorities forcefully defending the yen’s levels, challenging the current USD/JPY rates could invite further hefty intervention. For now, the unrelenting campaign seems to have fostered a cautious trading environment around the pair.
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