MUFG Research on the scope for another wave intervention by Japan's MoF.

"The USD/JPY rate has hit the highest level since December 1986 and what is noticeable about that is the lack of attention this is now getting. With the move a slow grind and with broader G10 and USD/JPY volatility levels so low the MoF’s justification for intervention is simply not there. The 1-month implied volatility in USD/JPY fell below 6% last week for the first time since February 2022," MUFG notes.

"We did get a comment from Finance Minister Katayama who laid the blame for yen weakness solely on the worsening situation in the Middle East but added that “we will take appropriate and bold action at any time, should the need rise”. That’s an interesting caveat – “should the need arise” which clearly suggests a lower sense of urgency than at previous times when intervention took place. There is certainly a shift in urgency in Tokyo which may point to resignation and reluctant acceptance of allowing the yen to weaken as long as the pace of the move is gradual," MUFG adds.