On Wednesday, the Japanese yen dropped to its weakest level since 1990.
The tumble happened in spite of the Bank of Japan’s (BoJ) first interest hike since 2007.
"This morning, USDJPY traded just below 152, and the close approach towards the significant handle triggered statements from BoJ officials about the potential need for central bank intervention in USDJPY to protect the currency, which the hike failed to do,” explains financial analyst of Steno Research Oskar Vårdal on Wednesday.
Earlier today, the Ministry of Finance along with the Bank of Japan jointly conducted a meeting where they issued a caution to markets about the potential for foreign exchange intervention, though it was merely a verbal warning at this stage, Vårdal highlights.
“With the track record of the BoJ, today’s statements are likely to serve as a bluff yet again,” says Vårdal, continuing, “which will allow JPY pairs to continue higher, all other things equal.”