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Jun 24 - 12:55 PM

BofA: 165 as the New Line in the Sand for USD/JPY Intervention

By eFXdata  —  Jun 24 - 10:36 AM


Bank of America (BofA) expects that the Ministry of Finance (MoF) in Japan may intervene to support the JPY if the USD/JPY pair continues to rise. They suggest that the MoF's intervention threshold has shifted to a range between 160 and 165, with 165 being the new critical level.

Key Points:

  1. Potential for MoF Intervention:

    • BofA anticipates that the MoF may step in to support the JPY if the USD/JPY exchange rate continues to increase.
    • The intervention threshold is suggested to be above 160 and below 165, with 165 being the critical level.
  2. Gradual Rise in USD/JPY:

    • The current rise towards 160 in USD/JPY has been more gradual compared to the rapid increase seen in the spring.
    • This gradual movement might influence the MoF's decision on when to intervene.
  3. Containment of USD/JPY:

    • BofA believes that the MoF can manage and contain the USD/JPY exchange rate for the remainder of 2024.
    • The intervention is expected to occur within the specified range to prevent excessive depreciation of the JPY.
  4. Implications of Intervention:

    • The intervention by the MoF would likely involve selling Treasuries outright, as implied by Japan's reserve data from May.
    • This strategy aims to stabilize the JPY and prevent it from breaching the new critical level of 165.


BofA projects that the MoF's intervention threshold for the USD/JPY exchange rate has shifted to between 160 and 165, with 165 as the new critical level. The gradual rise towards 160 and the potential for further depreciation necessitates close monitoring. The MoF is expected to intervene to contain the exchange rate within this range for the rest of 2024, reflecting a strategic move to support the JPY amidst fluctuating market conditions.

BofA Global Research


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