USD/JPY: Top 10 Largest Moves and How the BoJ Responded

The sell-off in USD/JPY this evening is one of the top 5 largest moves ever for USD/JPY. Whenever USD/JPY experiences such sharp volatility over a short period of time, the Bank of Japan usually comes in to quell the volatility. The following table shows the Bank of Japan’s actions in response to the top 10 largest moves ever in the currency pair. As you can see, the BoJ came into the market 7 out of the last 10 times USD/JPY experienced such a strong move. The reason why they did not intervene in 1998 was because USD/JPY was trading at 121 at the time. They also did not intervene in 2008 because USD/JPY jumped 5.66 percent, which helps rather than hurts the Japanese economy. Reuters reported that G7 finance ministers will be holding conference call on Japan tomorrow. Intervention by the BoJ is very likely this evening and if that fails to do the trick, the central bank and the Ministry of Finance could make a plea for coordinated intervention when the G7 meets tomorrow.

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