BofA Liquid Insight: Yen intervention FAQ

Key takeaways JPY at multi-decade lows; intervention checklist nearly complete, but effectiveness hinges on the broader USD cycle. MoF may embrace "constructive ambiguity"; Korea coordination talk, US participation unlikely absent market stress. No yen bulls: investors sell intervention rallies, yet balanced flows challenge bearish options pricing. FAQ on yen FX intervention risk JPY weakest in decades - why? Structural outflows, policy mix and equity hedging. Has intervention in 2020s been effective? No, unless broader USD cycle turns. Is FX intervention imminent? Checklist almost complete but Has MoF strategy changed? approach may shift to "constructive ambiguity". Japan-Korea coordination? Perhaps on messaging/timing but limited +ve externality. Japan-US coordination? Unlikely, unless spillover to global markets, especially USTs. Stronger intervention? We don't know, but that may be necessary to buy time. Financing & UST impact? UST sales in latest intervention but historically mild impact. Investor feedback? Not a single yen bull; everyone wants to sell intervention rallies. Our view? Balanced flows challenge structural yen bearishness priced in options. BofA Global Rates &.