The Japanese yen approaches a 38-year low, Japanese authorities shift to "tactical silence," markets remain alert for lightning interventions

BlockBeats News, June 22 — The yen against the dollar briefly touched around 161.7 on Monday, just a step away from the lowest point since 1986 at 161.96. Faced with ongoing depreciation, Japanese authorities remained silent, contrary to usual practice, with the market generally believing this was a "surprise" move to build up for a short squeeze.

Finance Minister Shōzō Katō only casually mentioned on Monday that "appropriate responses to exchange rate fluctuations will be taken in due course," with notably softened language. The finance official considered a key signal of intervention, Jun Sonomura, has been publicly silent since early May — he had issued a "final warning" before intervening at the end of April. According to informed sources, because previous overly transparent warnings gave speculators a chance to exit early, authorities are intentionally shifting to a surprise mode to maximize intervention effectiveness.

Mitsubishi UFJ Morgan Stanley Securities' chief FX strategist pointed out that, under the cover of official statements lacking urgency, sudden interventions could be more damaging. The latest CFTC data shows that net short positions in the yen have surged to 145,818 contracts, a new high since July 2024, with speculative forces highly concentrated.

Regarding inflation pressures, Bank of Japan Vice Governor Naoyuki Shinohara warned the parliament on Monday that there is a significant risk of deviation from the 2% inflation target. If yen depreciation continues to push up import costs, the risk of the central bank "acting too late" cannot be ignored. Analysts note that current market positions are overly stretched and dulled by official silence; once intervention begins, its effects could multiply geometrically.