The Bank of Japan (BoJ) intervened in the foreign exchange (FX) market in late April and early May 2026, selling over USD 70 billion to stabilise the yen after the USD/JPY pair surpassed 160 (value of one USD). With the yen currently hovering at around 162, the markets are speculating that the BoJ’s next intervention threshold could be near 165.
While FX interventions provide temporary relief, rate hikes are seen as the sustainable solution to strengthen the yen. The BoJ is expected to implement 25bp hikes every four to five months, with the next likely in October 2026. The policy rate is projected to reach 2% by Q4 2027 and 2.50% by September 2028, supporting a gradual appreciation scenario for the yen.
A joint US-Japan intervention, though unlikely, could dramatically alter market dynamics. The 12-month target for USD/JPY stands at 155, signalling moderate upside potential for the yen.