Friday’s intervention, which policy sources confirmed, came as the dollar hit a fresh 32-year high of 151.94 yen and triggered a rally of more than 7 yen for the Japanese currency to 144.50 per dollar.
That was the second confirmed instance of Japanese intervention, although traders suspect the BOJ had stepped in on other occasions in the past month to shore up a currency that has tumbled 22% this year against the dollar.
Analysts at Goldman Sachs said the intervention helps the BOJ limit yen depreciation and gives it time on its ultra-low interest rates’ policy, which is at odds with a global wave of tightening and has widened the gap between U.S. and Japanese interest rates.
“The yen’s beta to U.S. rates has fallen since the first intervention operation, and repeated intervention steps will likely keep it that way for a while, in part by inducing two-way volatility into dollar/yen,” Goldman wrote last week. “While sub-optimal and unsustainable in the medium term, we think this policy mix could be in place for some time.”
https://www.cnbc.com/2022/10/24/forex-markets-currencies-japan-yen-bank-of-japan-intervention.html
