Let’s just paint some colour to the backdrop on this whole issue.
Now, the IMF guidelines suggest that exceeding three intervention instances within a six months period could lead to a reclassification of the exchange rate from “free-floating” to a standard “floating” regime
A reclassification technically isn’t the end of the world but its a signal that the government, not the market, is instead becoming the primary driver/influence of said exchange rate or currency. In a way, think of it as something similar to a credit downgrade of sorts. It’s mostly a credibility issue and might invite political connotations with other countries, or should I say the US in particular, being able to point the finger and accuse Japan of currency manipulation.
But the worst case scenario for Japan is that if this whole thing were to play out, it’s yet another major sign of desperation. And you can bet that market players will be waiting to capitalise on that. As mentioned before, intervention is meant to be a signal play more than anything else.