Intervention only buys time with more fundamental steps needed to reverse the yen\u2019s downtrend, said Mitsuhiro Furusawa<\/p>\n
Published Fri, Aug 14, 2026 \u00b7 10:23 AM<\/p>\n
[TOKYO] Japan may conduct joint yen intervention \u201cat any time\u201d and signal the chance of faster-than-expected interest rate hikes to stem the currency\u2019s falls, said Tokyo\u2019s former top currency diplomat Mitsuhiro Furusawa.<\/p>\n
The yen is \u201cclearly too weak\u201d at current levels and hurting the economy by boosting import costs, Furusawa said, adding that Tokyo and Washington could step in again if the yen returns to levels hit before their joint intervention in July.<\/a><\/p>\n \u201cIt is probably not a matter of intervening specifically at, say, 160 or 162 yen per (US) dollar. But intervention could take place again at any time, including coordinated action with the United States,\u201d he told Reuters in an interview on Thursday (Aug 13).<\/p>\n Tokyo\u2019s coordinated intervention with Washington drove up the yen to around 155.20 per US dollar from a 40-year low of 163.99. It has since slid back to around 159.50.<\/p>\n Intervention only buys time with more fundamental steps needed<\/a> to reverse the yen\u2019s downtrend, such as faster rate hikes by the Bank of Japan (BOJ), said Furusawa, who retains close contact with Japanese and overseas incumbent policymakers.<\/p>\n \u201cMost market players believe the BOJ will raise rates in September and I think it should,\u201d though what is more crucial is for the central bank to communicate the likelihood of a faster pace of rate hikes, Furusawa said.<\/p>\n Since exiting a massive, decade-long stimulus in 2024, the BOJ has raised interest rates at a pace of roughly twice a year including in June, when it took rates to a 31-year high of 1 per cent.<\/a><\/p>\n \u201cMy guess is that the BOJ would like to raise rates to around 1.5 to 1.75 per cent judging from its estimate that Japan\u2019s neutral rate – or the level that neither cools nor overheats growth – sits in a range of 1.1 to 2.5 per cent,\u201d Furusawa said.<\/p>\n \u201cAfter September, the next move would likely come in December or January, followed by another hike sometime in the next fiscal year (beginning in April 2027), provided that the economy does not lose momentum,\u201d he added.<\/p>\n A nudge from US Treasury Secretary Scott Bessent and a slew of hawkish BOJ communications<\/a> have locked in a rate hike in September. Markets now see a 76 per cent chance of a hike in September, according to Tokyo Tanshi data, compared with 24 per cent on Jul 30.<\/p>\n