Coordinated Japan-US intervention's yen-strengthening effect seen as unsustainable without further BOJ rate hike

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Following the first coordinated currency intervention by Japan and the US in 15 years, pressure on yen-short speculators has intensified, but a deep-seated view persists in the market that the yen's strengthening effect will be short-lived without an additional rate hike by the Bank of Japan. In Asian trading on Monday the 3rd, the yen briefly rose 1% against the dollar to 155.20 yen, its highest in about three months, rebounding sharply from the nearly 40-year low of 163.99 yen set in July. Frederic Neumann, chief Asia economist at HSBC, noted that while coordinated intervention sends a powerful message, the yen's strengthening effect will be temporary without complementary monetary policy action. At its July meeting, the Bank of Japan indicated a focus on upside inflation risks and hinted at the possibility of an additional rate hike as early as September, but bears argue the long-term yen depreciation trend remains intact, with BNP Paribas' Chandresh Jain viewing the current yen strength as a buying opportunity for the dollar against the yen.