Citi discusses the JPY outlook and the scope of FX intervention.
"Based on our rough understanding from past FX-interventions by the MoF, there are four stages of language before an actual intervention occurs.
Stage 1: Excessive and disorderly movement in exchange rates is undesirable.
Stage 2: We will closely monitor movements in exchange rates.
Stage 3: We will take determined actions if necessary.
Stage 4. We have just carried out an intervention (on the implementation)," Citi notes.
"Finance Minister Suzuki’s expression regarding “necessary action” this Wednesday is half a step forward from the June statement, but we do not think it represents a transition to the stage three. In other words, we think that Japanese authorities are still at the stage two," Citi adds.