There has been a lot of debate in the currency market as to exactly when the BOJ would consider intervening given the sharp rise in the yen. It appears that BOJ is unwilling to act just yet, and may simply allow the market to stabilize naturally after the speculative frenzy of the past few weeks.
Any intervention by BOJ is complicated by the fact that the country is hosting the G-7 summit in May and member nations are not supposed to "manipulate the currency" unless it deviates greatly from fundamentals. If the BoJ intervenes against its strong currency, it would create a dangerous precedence.
Japanese officials have been on the wires more frequently over the past few days as they lay down the foundation for a case that yen is grossly overvalued on a fundamental basis. The most recent ones only this morning, however, comments do not seem to have made a lasting impression.
USD/JPY hit session lows at 107.63. Any further massive selling wave in USD/JPY that sees the pair break the 107.00 figure would trigger a more aggressive response from the officials. The pair has edged higher and is at the time of writing holding above 108 levels.
