Recently, there has been discussion about forecasts for the Japanese yen’s price action, and I noticed that the foreign exchange market is once again putting on an interesting show. Japanese authorities have apparently stepped in again recently, and the US dollar versus the Japanese yen briefly surged to around 155, with a very fierce upswing in the short term.

Based on data, Japan allegedly used about 5.4 trillion yen to intervene in the market last week, which is the largest single action to date. Goldman Sachs analysts calculated that, at this scale, Japan’s existing reserves would be able to support roughly 30 interventions. However, the authorities will likely manage things carefully and choose more critical moments to act.

To be honest, the 157 level seems to be turning into a new line of defense. But if you ask me, the core issues in forecasting the yen’s price movement are still interest rate differentials and energy costs. The repeated back-and-forth over the US–Iran situation has caused oil prices to spike, raising Japan’s import costs, widening the trade deficit, and all of these factors are weighing down the yen. Speculative funds naturally tend to be more inclined to short.

Some analysts believe that intervention is at best a tactic to buy time. Unless the crude oil market returns to stability, the effect can last at most only a few months. If structural problems are not resolved, the yen exchange rate could fall further to 160. ING also said that unless there is clear progress in US–Iran negotiations, the USD/JPY is likely to return to the 160 level in the coming weeks. So, for now, it appears that Japan’s authorities are mainly trying to buy time and wait for the situation to improve.