Former Japanese foreign exchange "boss": The yen may be undervalued by 20% and bears still need to be wary of intervention risks

On July 6, Tatsuo Yamazaki, a former financial officer at Japan's Ministry of Finance and former head of Japan's foreign exchange policy, said in an interview on Monday that the yen should appreciate by up to 20% from its current level (about 130 yen to the US dollar), and refuted those who bet that the yen may weaken further. Yamazaki said: "This is no longer a fundamental issue, but a question of how market expectations change. But we are approaching climax." He believes that the current estimate that the yen is undervalued by 10% may be conservative. "I wouldn't be surprised if the yen rose to around 130. To be honest, that's my opinion." At the same time, Yamazaki hinted that markets should not mistake the Japanese authorities 'recent apparent calm as complacency. He said: "They have issued a warning and anyone who still holds short positions in the yen knows that they risk being punished by intervention-that is, forced to close their positions. The Ministry of Finance has gone beyond the warning stage and the authorities have shown they are willing to take action."