In the trading session on Monday, the Yen once increased by 0.75% to 155.69 yen/USD, before narrowing its gains. Most of the fluctuations took place in a very short period of time in the middle of the trading session in Asia. At the close of the session, the Yen slightly increased by 0.1% to 156.84 yen/USD, after increasing by about 1.5% last week – the strongest increase since February.
Although the Japanese Ministry of Finance has not made official comments, sources said that the agency bought the Yen for the first time in two years last week. Monetary market data shows that Tokyo may have spent up to 5,480 billion yen (equivalent to about 35 billion USD) to support the exchange rate.
However, experts believe that officials will use the reserves cautiously, choosing the most effective time to intervene – especially when the Yen depreciates rapidly or fluctuates strongly.
It is estimated that Japan spent about 5,000 billion yen in a recent intervention session, when the exchange rate exceeded the 160 Yen/USD threshold - a level considered an important "defensive line". Currently, the country holds about 1,200 billion USD in foreign exchange reserves, of which more than 160 billion USD in foreign currency deposits can be used directly for intervention.
Pressure on the Yen comes from many factors, including rising energy prices and the monetary policy gap between the US and Japan showing no signs of narrowing in the short term.
In this context, the market is also closely monitoring the possibility that the US may coordinate with Japan to support the Yen. "If the Yen continues to weaken, the possibility of bilateral intervention may increase," said Mahjabeen Zaman - Head of Foreign Exchange Research at ANZ.
Along with monetary developments, geopolitical tensions in the Middle East continue to be a factor dominating the market. US President Donald Trump said Washington will implement a plan to support neutral ships leaving the Strait of Hormuz as a "humanitarian act", in the context of the conflict with Iran showing no signs of cooling down.
Iran warned it would react strongly if US forces entered the area. These developments have caused market sentiment to remain cautious.
The USD index – measuring the strength of the greenback against the major currency basket – rose slightly by 0.1% to 98.264 points. The Euro remained almost flat at 1.1717 USD, while the British Pound fell 0.1% to 1.3564 USD. The AUD fell 0.2%, while the NZD rose slightly by 0.1%.
Experts believe that although tariffs or trade factors still have a certain impact, developments in the Middle East are currently the main influencing factor for the global financial market.
In the coming time, the scale and frequency of Japan's intervention will depend on the depreciation rate of the Yen, the level of market volatility and important exchange rate thresholds. Choosing the appropriate "fall point" is considered a key factor to optimize the effectiveness of each intervention.
