Former BOJ Official: If Yen Falls Further, U.S. and Japan Will Jointly Intervene Again
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Atsushi Takeuchi, a former BOJ official who once ran Japan's FX operations, says a renewed yen slide would inevitably trigger another joint U.S.–Japan intervention — because Washington's backing effectively removes any ceiling on firepower, squeezing the space to short the yen.
Why does he call the intervention "unconstrained"?
Takeuchi participated directly in Japan's FX operations and still maintains contact with current policymakers.
His core point: U.S. participation = Japan now has a theoretically unlimited dollar supply behind it. This means → unlike past solo interventions where Japan's reserves set a hard cap, this time Washington co-signed — making it far harder for traders to bet Japan will run out of ammunition.
His bluntest line: "If I were running a hedge fund, I would not consider betting on dollar-yen direction right now." In plain terms = when even a former central-bank dealer won't touch the trade, the deterrence is working.
Where is the yen trading now?
After the joint intervention was announced, USD/JPY hit a three-month high of 155.20 (lower number = stronger yen); on Tuesday it stood at 157.60, roughly 4% stronger than last month's near-164 level — a four-decade low.
Takeuchi's expected short-term range: 155–162.
The key marker: if the yen holds inside 160 for about a week, the market will treat that level as a near-term floor. This means → a positive feedback loop could push the yen stronger still.
Why did the U.S. agree to step in?
On the surface it looks like a favor to Tokyo, but Takeuchi points to the real trigger: turmoil in the Japanese government bond (JGB) market.
The 10-year JGB yield — the government's borrowing cost — rose to a 30-year high last month. Markets read PM Sanae Takaichi's economic blueprint as a signal of large-scale fiscal expansion, raising fears the government might also lean on the BOJ to delay rate hikes.
This reflects a deeper worry: U.S. fiscal health is deteriorating fast, and a JGB yield surge could spill into U.S. Treasuries. In plain terms = if Japan's bond market spirals, America's bond market gets dragged along — so Washington isn't doing Tokyo a favor, it's building a firebreak around its own house.
Can intervention fix the root problem?
Takeuchi is explicit: intervention alone cannot deliver a lasting yen rally.
Whether the yen truly strengthens depends on PM Takaichi's government dispelling two market fears: ① no more large-scale fiscal expansion, and ② no pressure on the BOJ to hold off rate hikes.
This means → intervention only stops the bleeding. A shift in the policy signal is the real prerequisite for yen appreciation. If the government keeps signaling "spend big, suppress hikes," the intervention's effect will eventually be exhausted.
Content is for reference only, not financial advice.