--- title: "Former Japanese Finance Official Warns: Yen Intervention Could Recur at Any Time, BOJ Should Accelerate Rate Hikes" type: "News" locale: "en" url: "https://longbridge.com/en/news/295880212.md" description: "Mitsuhiro Furusawa, former Vice Minister of Finance for International Affairs at Japan's Ministry of Finance, issued a strong warning that the yen is \"significantly undervalued,\" suggesting that currency intervention could recur at any time, with joint action by Japan and the U.S. not ruled out. The market-implied probability of a September rate hike has surged from 24% to 76%, with the ultimate rate potentially rising to 1.75%. Goldman Sachs warns that if the Bank of Japan accelerates tightening, the pressure to unwind carry trades will spill over into global equity, bond, and foreign exchange markets" datetime: "2026-08-14T04:10:38.000Z" locales: - [zh-CN](https://longbridge.com/zh-CN/news/295880212.md) - [en](https://longbridge.com/en/news/295880212.md) - [zh-HK](https://longbridge.com/zh-HK/news/295880212.md) --- # Former Japanese Finance Official Warns: Yen Intervention Could Recur at Any Time, BOJ Should Accelerate Rate Hikes Mitsuhiro Furusawa, former Vice Minister of Finance for International Affairs at Japan's Ministry of Finance, issued a strong warning that the current level of the yen is "significantly undervalued," dragging down the economy by pushing up import costs. He stated that intervention could happen again at any time, and the Bank of Japan (BOJ) should accelerate its pace of rate hikes to fundamentally reverse the yen's decline. In an interview with Reuters on Thursday, Furusawa said that if USD/JPY returns to the levels seen before last month's joint intervention, Japan and the United States might once again join forces to enter the market. **"Intervention could occur again at any time, including coordinated actions with the United States,"** he said. USD/JPY is currently trading near 159.50, having fallen back more than four big figures from the vicinity of 155.20 reached during the joint Japan-U.S. intervention, and is approaching the previous intervention trigger level. Market expectations for rate hikes have also heated up rapidly. According to data from Tokyo Tanshi, **the market-implied probability of a BOJ rate hike in September has jumped significantly from 24% on July 30 to 76%.** Goldman Sachs warned that if the BOJ accelerates its tightening pace, there is still room for further unwinding of yen carry trades, and the associated spillover effects could impact global stock, bond, and foreign exchange markets. ## Intervention "Buys Time" as Yen Gives Back Most Gains The joint intervention by Japan and the U.S. previously pushed USD/JPY all the way up from its 40-year low of 163.99 to around 155.20, but this effect is fading quickly, with the exchange rate sliding back to near 159.37. Furusawa was blunt in his assessment, stating that foreign exchange intervention can only "buy time" and cannot fundamentally reverse the yen's downward trend. "The issue may not be about intervening at specific levels like 160 or 162," he said, "but intervention could happen again at any time." He emphasized that **if the yen returns to the levels seen before last month's joint intervention, Tokyo and Washington might take joint action again.** Furusawa's resume shows his deep connections within policy circles. He served for a long time at Japan's Ministry of Finance and later as Deputy Managing Director of the International Monetary Fund until 2021. He currently serves as the Director of the Institute for Global Financial Affairs under Sumitomo Mitsui Banking Corporation. ## September Rate Hike Bets Rise to 76%, Furusawa Says "Should Hike" Since exiting its decade-long massive easing policy in 2024, the BOJ has largely maintained a pace of two rate hikes per year, raising the policy rate to a 31-year high of 1% in June this year. Furusawa expressed support for another rate hike in September but emphasized that a single move has limited significance. "Most market participants believe the BOJ will hike rates in September, and I also think it should," he said. **"But more critical than a single hike is that the BOJ needs to convey to the market the possibility of hiking rates at a faster pace in the future."** The market has clearly picked up on this signal. According to Tokyo Tanshi data, the market-implied probability of a September rate hike has surged from 24% on July 30 to 76%, significantly strengthening expectations of a policy shift. ## Ultimate Rate Seen at 1.5%-1.75%, Hiking Path Gradually Unfolds Regarding long-term interest rate targets, Furusawa speculated that the BOJ's policy rate could ultimately rise to 1.5% to 1.75%, based on the central bank's estimate of a neutral rate range of 1.1% to 2.5%. He outlined the hiking path as follows: **after a rate hike in September, the next move could come in December or January of next year,** followed by another in fiscal year 2027 (starting in April), provided the economy does not stall. Furusawa also urged Prime Minister Sanae Takaichi's government not to interfere with the BOJ's rate-hiking process and to fulfill its commitment to fiscal sustainability. "The ideal outcome is to escape the situation of the yen being excessively sold off through monetary and fiscal policies, while allowing growth strategies to begin taking effect," he said. "This will allow the yen to appreciate gradually over time." ## Carry Trade Unwinding Pressure Persists, Spillover Effects Cannot Be Ignored According to Reuters, Goldman Sachs strategist Karen Reichgott Fishman pointed out in a report that USD/JPY has given back about half of its initial decline, as the current macroeconomic background provides less support for the yen than in the summer of 2024. Goldman Sachs believes that although speculative short positions have been significantly compressed, further unwinding could still occur if conditions permit; if the macro and market environment shifts to support yen appreciation, positions could even turn net long, as seen in the pattern from July to August 2024. **Goldman Sachs also noted that if the BOJ accelerates its tightening pace, it will narrow the interest rate differential between Japan and the U.S. and raise the funding cost for shorting the yen. Even if the global economic growth environment remains unchanged, the yen could remain strong for a longer period. Once this mechanism is triggered, the spillover effects will directly transmit to the liquidity dynamics of global stock, bond, and foreign exchange markets.** ### Related Stocks - [FAS.US](https://longbridge.com/en/quote/FAS.US.md) - [FAZ.US](https://longbridge.com/en/quote/FAZ.US.md) - [SEF.US](https://longbridge.com/en/quote/SEF.US.md) - [SKF.US](https://longbridge.com/en/quote/SKF.US.md) - [UYG.US](https://longbridge.com/en/quote/UYG.US.md) ## Related News & Research - [BOJ's debate on faster hikes bolsters September rate move odds](https://longbridge.com/en/news/295351318.md) - [Jack Lew on July CPI data: 'Paints a picture that's very challenging in terms of the future direction'](https://longbridge.com/en/news/295693182.md) - [Companies have rarely had such great expectations](https://longbridge.com/en/news/295921988.md) - [What top minds in markets are saying about the US intervention to prop up Japan's currency](https://longbridge.com/en/news/294714333.md) - [BOJ debated scope to hasten rate-hike pace in July, summary shows](https://longbridge.com/en/news/295341336.md)