According to Derek Halpenny from Mitsubishi UFJ Financial Group in a report, Japanese authorities are likely to hold back on following through with their threat to intervene in the yen market before the Bank of Japan's policy decision on January 23.
He stated that Bank of Japan Governor Kazuo Ueda is expected to maintain a cautious stance regarding further interest rate hikes. This cautious approach is one of the factors that could lead to the failure of any intervention measures aimed at supporting the yen. Other factors include the plans for an early election by Minister Sanae Takaichi and indications from Federal Reserve officials about a pause in interest rate cuts.
He added that intervention measures could be more successful if the Bank of Japan demonstrates a clearer opposition to yen depreciation and signals an earlier move to raise interest rates.
The dollar fell 0.3% to 158.10 yen.
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