📌 The BoJ can intervene in the exchange rate, Yen experiences the most volatility in 3 years

Previously, a weak Yen was seen as a trade-off to support exports, and although the BoJ occasionally issued warnings, it maintained low interest rates to protect growth and the bond market.
When USD/JPY surpassed 160, the line between supporting the economy and fueling inflation was blurred.
Japan relies heavily on imported energy, so when Brent rose to $125 while the Yen continued to depreciate, the cost shock was doubled: oil became more expensive in USD, and even more so when converted to Yen.
The excessively weak JPY has become a policy risk.
On paper, FX intervention is a decision made by the Ministry of Finance. But in essence, it shows that the BoJ must admit that the exchange rate has negatively impacted monetary policy.
The BoJ sold USD to buy Yen, and Japan achieved three goals simultaneously: forcing the market to cover short Yen positions, reducing imported inflation pressure, and buying more time so the BoJ wouldn't have to raise interest rates too quickly.
USDJPY immediately dropped 500 pips from above 160 to 155.75 — the most volatile move since 2023.