Market Analysis: The joint intervention by Japan and the US to intervene in the yen has a high threshold and is unlikely to occur in the short term.

Odaily Planet Daily reported that market analysts stated that the currency check conducted by the New York Fed last Friday is the clearest signal so far, indicating that US and Japanese authorities are working closely to curb the yen’s depreciation, which also keeps the market highly alert to intervention. However, direct coordinated intervention may not occur as quickly as expected. JPMorgan’s Chief FX Strategist in Japan, Junya Tanase, said: “Past coordinated interventions have only occurred in extremely rare circumstances. There is still a considerable gap between the joint currency check and actual coordinated intervention.” Shota Ryu, FX strategist at Mitsubishi UFJ Morgan Stanley Securities, stated: “The US may not be willing to buy a currency that has depreciated for five consecutive years, and may cooperate in a small-scale intervention, but it is unlikely to take actions that fundamentally reverse the yen’s downward trend.” If Japan continues to intervene, it would require selling some US debt holdings, which could push up US bond yields. Given the already volatile market, this is a result the US may not want to see. Further decline in the dollar could fuel the “Sell US” trade that heated up again last week. Takuya Kanda, an analyst at Gaitame.com, said: “In the context of concerns about global de-dollarization, the US is unlikely to directly participate in intervention to sell dollars.” (Jin10)