Former BoJ Officials Hints At No Further JPY Intervention Below 150
Fumio Kishida is a prominent ex-BoJ official who has passed an interesting comment about the Yen intervention. According to him, the BoJ will not intervene in the markets as long as the USD/JPY rate is below 150.00.
But if the USD/JPY pair indeed crosses the 150.00 level, then it would become trouble for Japanese officials. As of right now, the USD/JPY is trading near 146.25, which suggests that we are only 375 pips away from the target level.
If we look back, the BoJ intervened in the markets when the USD/JPY crossed the 145.00 level. At that time, the market was already speculating that Tokyo would intervene in the FX markets to support the Yen.
In general, the BoJ officials usually don't have specific levels that they pay close attention to! However, the significance of the 150.00 level does seem to be paramount as it carries a heavy political burden for the government.
Weaker Yen And The Public's Reaction
That's why we can safely say that it is not the specific levels but the mood of the public which paves the foundation for FX intervention. After all, households and firms in Japan pay close attention to the Yen.
One particular thing to note here is that the public is not as anxious about a weaker Yen as it was a few years ago. So in a sense, we can say that the households and the firms have become accustomed to a weaker yen and thus high prices.
One the one hand, a weak yen can make prices higher for households. On the other hand, it also helps in the revival of inbound tourism as well as the service sector.
So whenever the decision for the FX intervention is made in Japan, it will always be political since it is tied to public demand.
For now, the chances of FX intervention by the BOJ will rise significantly if the USD/JPY crosses the 150 level.