What are the chances of a second round of government intervention?

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By 10:14 ET, the Japanese yen’s USD/JPY was marginally down at $156.42, reversing course after falling over 2% in the prior session.

The drop was largely attributed to government intervention, with Tokyo seen stepping in after USDJPY crossed 160 yen earlier this week. The level has drawn intervention in the past.

Historically, such interventions have often been followed by a second round within one or two trading days. These typically occur after the currency pair retraces about 50–70% of its initial drop. Based on this pattern, analysts see the 158–159 range as a key zone where authorities may act again.

However, the report cautioned that the overall impact of intervention is likely to be temporary. Without sustained policy support—particularly interest rate hikes from the Bank of Japan—the yen may resume weakening, potentially pushing USD/JPY back toward the 160 level over time.

While markets still price in a roughly 60% chance of a rate hike in June, the central bank’s decision to hold rates steady in April may have reduced the effectiveness of the intervention. Analysts suggest that stronger monetary tightening would have reinforced the government’s efforts to stabilize the currency.

In the meantime, the intervention has created tactical opportunities for investors and corporates. Importers may use the stronger yen to secure dollar funding, while others could hedge against further yen depreciation.

Despite the potential for additional intervention rounds, BofA notes there are limits to how aggressively Japan can act, citing constraints such as foreign reserve conservation and international currency diplomacy considerations.