USD/JPY is nearing the point (147.66) that marked the peak during the last, intense support operation for the yen that the Bank of Japan unleashed in 1998. The real issue is whether intervention would be effective in stemming the JPY slide. The answer is that unilateral intervention is unlikely to achieve a sustained rise in the yen, in the view of economists at Scotiabank.

US and Japanese monetary policy settings are moving in opposite directions

“A bout of official intervention could prompt a sharp-ish rebound in the JPY in the short run – perhaps by as much as 3-5% if timed well.”

“Beyond an unfeasibly large and sustained period of official JPY buying, a more sustained rebound in the JPY will need the support of a change in underlying fundamentals (monetary policy dynamics) and a reversal in the broader USD bull trend.”