Analyst: Now is indeed a good time for the Japanese authorities to support the yen

On July 30, the yen soared sharply on Thursday. The market generally believed that this trend was typical of the Japanese government intervening in the foreign exchange market to support the yen's fall to a 40-year low. The dollar fell 3% to 158.34 against the yen, off a 40-year high set earlier this week and on track to record its largest one-day decline since the end of 2022. For months, the Japanese government has been warning that it will take action if the yen continues to weaken. As energy import prices soared and the depreciation of the yen further exacerbated the pressure on residents 'living costs, the market remained highly vigilant against Japanese authorities buying yen for intervention. The yen's surge came on the eve of the Bank of Japan's policy meeting on Friday and after the Federal Reserve voted in a divided decision on Wednesday to keep interest rates unchanged and push the dollar weaker. Foreign exchange analysts said that month-end position adjustments, weak U.S. economic data and the overall weakening of the U.S. dollar provided a favorable opportunity for the Japanese authorities to support the pressured yen. Japanese Finance Minister Takazuki Katayama has reiterated many times recently that the government is ready to take action in the foreign exchange market.