Japanese Yen: Interventions signal valuation shift – DBS
DBS Group Research Strategist Chang Wei Liang highlights that the Japanese Yen (JPY) remains undervalued but that this undervaluation has narrowed after Japan’s second FX intervention of 2026, conducted jointly with the United States (US).
DBS Group Research Strategist Chang Wei Liang has noted that the Japanese Yen (JPY) is no longer considered undervalued, but this undervaluation has reduced since Japan's second FX intervention of 2026, carried out jointly with the United States. This rare joint effort, last seen in 2011, intends to curb JPY weakness and alleviate pressure on Asian currencies like the South Korean Won (KRW) and Renminbi (RMB).
Liang emphasizes that such coordinated interventions, seldom seen, aim to mitigate unwanted selling pressure on regional currencies. The involvement of the US in these interventions bolsters the credibility of Japan's actions, potentially reducing the scale of asset sales and associated volatility in the US Treasury market. This support might also stem from US Treasury Secretary Bessent's regular dialogue with Japanese policymakers, providing insight into Japan's policy deliberations.
The JPY's undervaluation has narrowed from record levels following Japan's second FX market intervention this year, conducted in coordination with the US.
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