Reuters poll shows yen likely to weaken despite joint US-Japan intervention

The United States and Japan last week confirmed their first coordinated yen-buying intervention since 1998, pulling the Japanese currency back from a 40-year low near 164 per dollar. But analysts broadly agree the operation has only bought time, with a Reuters poll showing the yen is expected to weaken again before gradually recovering over the next year.reuters+1

A Rare Move With Limited Shelf Life

The intervention came after the yen collapsed to 163.73 per dollar on July 30, its weakest level since 1986. Japan appears to have acted alone first, before the U.S. Treasury joined on August 1 in a coordinated operation that pushed the yen back to roughly 157.57 by the close of trading. The move was confirmed on August 3 by both Japan's Finance Ministry and the U.S. Treasury.suncrypto+2

In a notable tactical choice, the New York Fed sold euros rather than dollars to purchase yen, avoiding any signal that Washington intended to weaken the greenback. Industry veterans told CNBC that one of Washington's chief concerns was preventing Japan from dumping U.S. Treasuries to finance unilateral intervention, given that Japan remains the largest foreign holder of American government debt.cnbc+1

Despite the initial bounce, The Wall Street Journal News Corp ↗ 0.62% reported that investors remain skeptical about a sustained recovery. A Reuters poll published Tuesday found the median forecast shows the yen weakening to 159 per dollar in three months before strengthening to 157 in six months and 154 in a year, reflecting the view that intervention alone cannot overcome the wide U.S.-Japan interest rate differential.wsj+1

Bessent's Comments Fuel BOJ Rate Hike Expectations

Treasury Secretary Scott Bessent's post-intervention media appearances have intensified debate about the Bank of Japan's next move. Bessent told CNBC that intervention should be accompanied by tighter monetary policy and expressed confidence that BOJ Governor Kazuo Ueda would pursue policies to stabilize the yen.economictimes+1

Those comments have strengthened expectations of a BOJ rate hike as early as its September 17–18 meeting, while raising questions about central bank independence. Kazuo Momma, a former BOJ executive now at Mizuho Research Institute ↗ 0.09%, said the joint intervention has given the BOJ greater freedom to raise rates but warned that U.S. participation creates expectations making it harder for Japanese authorities to delay action.economictimes

A July Reuters poll found 86 percent of economists expected a 25-basis-point hike to 1.25 percent by year-end, with September and October both considered possible timing.investing

Structural Forces Remain Unchanged

Strategists at BNY Mellon The Bank of New York Mellon Corporation ↘ 1.27% argued the intervention "has bought time but hasn't materially increased foreign JPY holdings," adding that investors will not rebuild yen exposure "without credible domestic follow-through." Societe Generale Société Générale S.A. analysts said a durable yen rally requires improved consensus forecasts for Japanese growth, not policy theatrics.tmgm

TD Securities noted the 1-year, 1-year overnight index swap for Japan stands at 1.9 percent versus 4.1 percent for the United States — a 2.2-percentage-point gap that continues to favor dollar-denominated assets. Unless the BOJ tightens aggressively, TD warned, "the trend is for USDJPY to resume its uptrend."tmgm