Danske Research discusses the scope for JPY intervention and argues that the BoJ is likely to refrain from intervention in the very near-term.
"After broad USD strength took USD/JPY close to 145, the Bank of Japan did a "rate check" yesterday, where they asked market participants about FX rates as a preparation to potentially intervene. It constitutes a next step beyond just verbal intervention, and markets also took notice and traded USD/JPY off the 24-year highs. Markets can only continue guessing as the Ministry of Finance will not be transparent about its plans. FM Suzuki said the Ministry will not announce any plans to intervene in advance, and usually will not confirm it stepped into the market after doing so," Danske notes.
"In the end, politicians will have to decide whether to intervene to support yen. We continue to think they will have a strong preference to refrain from intervention, which would be unpopular with the G7, not least the US. There are other ways to boost yen demand. Japan has opened its borders to package tourists but in practice it is still cumbersome to get into the country. Some loosening of tourist restrictions could be one way to support the yen," Danske adds.