MUFG says low yen volatility and gradual USD/JPY gains reduce urgency for Japanese authorities to intervene despite multi-decade highs.
The USD/JPY pair reached its highest level since December 1986, driven by rising oil prices, higher bond yields, and renewed US-Iran tensions. The move has been gradual, with traders avoiding rapid acceleration despite fresh 40-year highs.
One-month implied volatility in USD/JPY fell below 6% last week for the first time since February 2022. Analysts note that low volatility across G10 currencies weakens the case for Ministry of Finance intervention, despite verbal warnings from officials.
Finance Minister Katayama attributed yen weakness to Middle East tensions but indicated action would only come if “the need arises,” signaling lower urgency than in previous episodes.