Japan intervened in the foreign exchange market for three consecutive days during the Golden Week holiday, but authorities immediately cited IMF regulations to state that these actions "count as one." This statement reflects the Japanese government's careful calculation regarding intervention frequency.
An official from Japan's Ministry of Finance stated on May 5 that, according to relevant IMF rules, interventions conducted over three consecutive business days are considered a "single action." The official made these remarks while accompanying Finance Minister Satsuki Katayama at an international conference in Samarkand, Uzbekistan.
Based on this calculation, the interventions on April 30, May 2 (Friday), and May 4 (Monday) are combined and counted as one instance. The official added that even if it is a public holiday in Japan, as long as global markets are open, the intervention can still be counted. Therefore, May 4 was recognized as the final day of the three consecutive business days starting from April 30.
Why the "Number" is Crucial This is not merely a technical detail; it pertains to the international credibility of Japan's exchange rate policy.
IMF rules stipulate that a maximum of three such intervention actions within a six-month period is allowed to maintain a "free-floating exchange rate" designation. Exceeding this limit would lead the IMF to downgrade Japan's exchange rate regime to a "floating rate." This distinction carries substantive significance in the international monetary system and directly impacts Japan's policy space within the G7 framework.
In other words, by invoking the "three days count as one" rule, Japan is essentially preserving quota for potential future intervention actions.
Diminishing Effects from Three Rounds of Action This round of intervention began on April 30, triggered when the USD/JPY pair rose above 160.72. According to Bloomberg analysis, authorities used approximately $34.5 billion that day to support the yen, which subsequently rebounded to around 155.
However, the effectiveness of the subsequent two interventions noticeably diminished. The yen strengthened briefly after each action but then fell back again. Reports indicate the latter two interventions combined cost around $20 billion. In total, the scale of this intervention round is estimated to exceed $54 billion.
On Monday, Satsuki Katayama reiterated that the government is "ready to take resolute action against speculative exchange rate movements at any time," wording consistent with the agreement reached between Japan and the US last year.
Nomura: Sustained Intervention Effect Depends on Three Conditions The more pressing question for markets is: how long can this round of intervention last?
In a weekly report issued on May 1, Naka Matsuzawa, a macro strategist at Nomura Securities, stated plainly that the intervention itself is not the main point; the "endgame" is. He noted that unless three conditions are met simultaneously, the effects will not be lasting:
1. US understanding and cooperation. Matsuzawa judges that such a high-profile intervention would be almost impossible to implement without prior knowledge from the US Treasury. US Treasury Secretary Scott Bessent is scheduled to visit Japan in mid-May. He has long held the view that the Bank of Japan is "behind the curve" and has warned that excessive volatility in the Japanese government bond market could impact global financial markets. 2. The Bank of Japan paves the way for a June rate hike. If the BOJ's pace of interest rate hikes is slower than expected, pressure for yen depreciation will continue to build. 3. Sanae Takaichi's willingness to adjust policy direction. This is the most uncertain, yet most critical, factor according to Matsuzawa – whether Takaichi is willing to prioritize curbing yen depreciation and support the BOJ in raising interest rates towards neutral levels.
Matsuzawa conceded that "Japan does not yet seem to have taken even the first step."
"Buying Time" or a Genuine Shift? Matsuzawa raised a deeper question: Is Sanae Takaichi genuinely aiming to correct excessive yen depreciation, or is she merely waiting for Middle East tensions to ease and energy trade to normalize?
He pointed out that if the answer is the latter, against a backdrop of an unresolved blockade in the Strait of Hormuz and fading expectations for Federal Reserve rate cuts, the risk of "selling Japan" trades resurging before June increases significantly.
Nomura has raised its recommended entry range for shorting USD/JPY to 157-162, with a target of 145 and a stop-loss at 166. The position is currently awaiting entry.
Matsuzawa's assessment for the week's market tone was cautious: equities leaning weaker, bonds flat, the US dollar leaning stronger, and the yen flat. He also noted that unless USD/JPY breaks above 160 again, no additional intervention should be expected.
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