Analyst: Japan likely intervened again, but yen's weak trend to continue

Analyst Justin Low suggested today that Japan appears to have conducted a second currency intervention in response to sharp fluctuations in the yen. He explained that a second intervention would be more effective, as speculators caught on the wrong side of the trade would likely move to the sidelines. The dollar-yen exchange rate briefly plunged by 130 to 150 pips, falling back toward yesterday's low of around 155.55 before rebounding. Low noted that the Ministry of Finance's decision to intervene a second time indicates its determination to push the exchange rate below that level at any cost. However, he also pointed out that depleting foreign exchange reserves simply to send a message to the market would be wasteful, even with sufficient holdings. Low added that all current fundamentals are unfavorable for the yen, a fact he believes policymakers are aware of, describing the situation as a "desperate phase" amid the ongoing U.S.-Iran conflict and the continued closure of the Strait of Hormuz.