The Japanese Yen's Depreciation Difficult to Stop, Exchange Rate Hits New Low Triggering Policy Intervention Concerns

Recently, the Japanese Yen has shown weakness, with the USD/JPY exchange rate falling below 155, and the EUR/JPY hitting an all-time low. Behind this wave of depreciation are not only the shifts in US policy but also market expectations regarding the Bank of Japan's policy direction.

**Frequent Policy Signals, What Is the Market Sensing?**

Japan's new Prime Minister, Fumio Kishida, recently issued a warning to the Bank of Japan, urging caution in raising interest rates. The implied message is to slow down the pace of rate hikes. Meanwhile, Japanese Finance Minister Shunichi Suzuki issued a warning on November 12, emphasizing that the foreign exchange market has experienced "one-sided rapid fluctuations." These actions indicate that Japanese authorities are becoming aware of the yen's depreciation trend.

Looking at historical precedents, Japan has experience intervening in the currency market. In 2022 and 2024, whenever the yen faced significant depreciation, the Ministry of Finance intervened decisively. Last year, intervention levels were set around 158 and 161.7, respectively. This suggests that the current market trend is approaching a historically sensitive point.

**Diverse Opinions, But Where Is the Consensus?**

Regarding the timing of policy intervention, opinions among different institutions vary. Bank of America believes that the USD/JPY needs to test the 158 level before triggering meaningful policy responses. Goldman Sachs judges that the probability of intervention will significantly increase when the exchange rate reaches 161-162. These views reflect differing assessments of Japan's tolerance for yen depreciation.

It is worth noting that most institutions tend to believe that the likelihood of immediate intervention by Japanese authorities in the short term is low. This judgment is based on a comprehensive assessment of the current global economic landscape and Japan's policy space.

**Future Trends: Who Will Lead?**

The future exchange rate movement mainly depends on two factors. First, the economic data released sequentially after the US government’s reopening—this determines the strength of the dollar. Second, Prime Minister Fumio Kishida's upcoming economic stimulus plan in late November—this will influence market expectations for Japan's outlook.

From a technical perspective, tools like Lagrange interpolation can be used for range analysis to identify key support levels, but fundamentally, macro policy orientation remains the decisive factor.

According to estimates from JPMorgan and Mizuho Securities, the target price for USD/JPY at the end of December 2025 is 156. This forecast considers the possibility of policy intervention and reflects an assessment of long-term exchange rate equilibrium.

In other words, the yen's depreciation will not continue indefinitely, but the timing and intensity of policy intervention remain variables. Investors need to closely monitor US and Japan economic data and policy developments to grasp the rhythm of exchange rate fluctuations.