Goldman, BofA See No Imminent Intervention Risk As Yen Nears 155
JustinGoldman Sachs Group Inc. and Bank of America Corp. see little immediate risk of currency intervention in Japan, saying the usual triggers "have not yet been met" even as the yen approaches the closely watched 155-per-dollar level.
Goldman Sachs Group Inc. and Bank of America Corp. see little immediate risk of currency intervention in Japan, saying the usual triggers "have not yet been met" even as the yen approaches the closely watched 155-per-dollar level.
The yen "does not appear to be at particularly weak levels," Goldman strategist Karen Reichgott Fishman wrote in a note dated Monday. Recent underperformance has been driven largely by a repricing of Japan's fiscal risk premium and near-term Bank of Japan rate expectations, she said.
That view is echoed by BofA's Shusuke Yamada, who said dollar-yen above 155 is "unlikely to trigger imminent intervention in absence of excessive volatility or a build-up in speculative positioning."
The yen slid about 4% against the dollar in October, making it the worst performer among G-10 currencies. The selloff came as markets digested Prime Minister Sanae Takaichi's perceived tilt toward fiscal expansion and dovish monetary policy. The currency weakened further after BOJ held rates steady last week with Governor Kazuo Ueda offering little guidance on future hikes, saying the central bank wasn't at risk of falling behind the curve. It slipped further on Tuesday to 154.48 per dollar after Takaichi said she aims to boost tax revenue without hiking tax rates.
The currency depreciation has triggered verbal intervention from officials. Finance Minister Satsuki Katayama said Friday that authorities are monitoring currency movements, including those driven by speculation, with a high sense of urgency.
Japan's Ministry of Finance last intervened in the forex market in 2024, stepping in at levels around 157.99, 159.45, 160.17 and 161.76 per dollar. Authorities have stayed on the sidelines for over a year.
Goldman estimated the finance ministry has about $270 billion of available funds for intervention before having to sell longer-term securities, giving it the capacity to match the sizes of the most recent interventions in 2022 and 2024. Intervention risk would rise when dollar-yen reaches the 161-162 level, it said.
Without a sharp rise in speculative positioning or volatility, dollar-yen "could test the 158 level before triggering a meaningful policy response," BofA's Yamada wrote in a note on Monday. He maintained his year-end forecast of 155, while adding "the risk of an overshoot to 160 in 4Q25 has risen."
Looking further out, Goldman expects the yen to appreciate gradually as hedging costs fall and the dollar weakens. That move could accelerate if US labor market data deteriorate. However, greater-than-expected fiscal stimulus in Japan — particularly if seen as limiting the BOJ's ability to tighten — or renewed US economic outperformance could undermine that view.
