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May 03 - 12:55 PM

Credit Agricole: Japan MoF and BoJ Have Probably Succeeded in Generating Asymmetric Risks Around USD/JPY

By eFXdata  —  May 03 - 10:45 AM


Credit Agricole suggests that recent interventions by Japan's Ministry of Finance (MoF) and Bank of Japan (BoJ) have successfully created asymmetric risks around the USD/JPY exchange rate. Estimated expenditures nearing those of previous interventions in 2022 have effectively influenced market expectations and risk assessments.

Key Points:

  • Intervention Estimates: Preliminary data indicates that the BoJ may have spent approximately USD 55 billion on interventions to support the yen, with significant purchases occurring on specific days last week.

  • Comparison with Previous Interventions: This level of intervention is close to the USD 60 billion spent during the last major intervention effort in September and October 2022, which resulted in a notable depreciation of USD/JPY.

  • Market Impact: The actions by the MoF and BoJ have likely set a temporary ceiling on USD/JPY, deterring traders from pushing the pair significantly higher. This effect is complemented by the recent dovish signals from the Federal Reserve, which curb expectations of a rapidly strengthening USD.


The concerted efforts by Japan's financial authorities appear to have tempered the bullish momentum in USD/JPY, establishing a cautious trading environment. Investors may be hesitant to challenge these levels soon, given the aggressive stance of the MoF and supportive rhetoric from the Fed.

Crédit Agricole Research/Market Commentary


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