Yamada Shusuke, Japan's chief foreign exchange and interest rate strategist at Bank of America Securities, said that in order to successfully defend the Japanese yen exchange rate, intervention in the foreign exchange market by the Ministry of Finance alone is far from enough; the Bank of Japan must release a clear hawkish policy signal. He pointed out that as the exchange rate of the US dollar against the yen approaches the 165 mark, the risk of Japanese authorities interfering in the foreign exchange market is rising significantly. Yamada Shusuke analyzed in the latest research report that although the probability of interest rate hikes in July is extremely low, the Bank of Japan decision makers need to adopt forward-looking guidelines to effectively boost market expectations for the September rate hike. Currently, interest rate swap market pricing shows that the probability of a 25 basis point rate hike in September is only 27%. The strategist emphasized that 165 is the next potential intervention threshold for the USD/JPY exchange rate. Allowing the exchange rate to break through this level will be interpreted by the market as a lack of determination on the part of the Japanese authorities to defend the yen, which in turn could trigger a chain reaction of speeding up the sell-off of the yen. Currently, the exchange rate of the US dollar against the yen is trading around 163.70, which is close to the historical low since the mid-80s of the last century. Furthermore, large-scale foreign exchange market intervention may also trigger market concerns that Japanese treasury bonds will be sold off. Yamada Shusuke pointed out that from the perspective of monetary diplomacy, any substantial foreign exchange intervention will actually increase the pressure on the Bank of Japan to further tighten monetary policy. At the political level, as Japanese Prime Minister Takaichi Sanae's approval ratings declined, the political cost of allowing the yen to depreciate further is rising. Yamada Shusuke concluded that the Japanese authorities are approaching a tipping point where they must substantially strengthen their defense of the yen. 10 sources

Yamada Shusuke, Japan's chief foreign exchange and interest rate strategist at Bank of America Securities, said that in order to successfully defend the Japanese yen exchange rate, intervention in the foreign exchange market by the Ministry of Finance alone is far from enough; the Bank of Japan must release a clear hawkish policy signal. He pointed out that as the exchange rate of the US dollar against the yen approaches the 165 mark, the risk of Japanese authorities interfering in the foreign exchange market is rising significantly. Yamada Shusuke analyzed in the latest research report that although the probability of interest rate hikes in July is extremely low, the Bank of Japan decision makers need to adopt forward-looking guidelines to effectively boost market expectations for the September rate hike. Currently, interest rate swap market pricing shows that the probability of a 25 basis point rate hike in September is only 27%. The strategist emphasized that 165 is the next potential intervention threshold for the USD/JPY exchange rate. Allowing the exchange rate to break through this level will be interpreted by the market as a lack of determination on the part of the Japanese authorities to defend the yen, which in turn could trigger a chain reaction of speeding up the sell-off of the yen. Currently, the exchange rate of the US dollar against the yen is trading around 163.70, which is close to the historical low since the mid-80s of the last century. Furthermore, large-scale foreign exchange market intervention may also trigger market concerns that Japanese treasury bonds will be sold off. Yamada Shusuke pointed out that from the perspective of monetary diplomacy, any substantial foreign exchange intervention will actually increase the pressure on the Bank of Japan to further tighten monetary policy. At the political level, as Japanese Prime Minister Takaichi Sanae's approval ratings declined, the political cost of allowing the yen to depreciate further is rising. Yamada Shusuke concluded that the Japanese authorities are approaching a tipping point where they must substantially strengthen their defense of the yen. 10 sources