Japan traders on high alert for intervention risk ahead of BOJ decision; "Silver Week" could serve as action window

Odaily News: With the Bank of Japan's policy decision imminent, yen traders are on high alert for potential intervention by Japanese authorities in the currency market. Since the BOJ's announcement will be followed by a three-day holiday, market participants believe authorities could take action during the low-liquidity period of the holiday. The yen extended its gains on Thursday, underscoring market tensions ahead of the BOJ's September 18 policy meeting, where a rate hike is widely expected. In April this year, Japanese authorities waited until a long national holiday to conduct their first intervention since 2024. Now, investors speculate that Japan may employ a similar strategy during the "Silver Week" holiday that begins shortly after the BOJ's policy meeting. Samara Hammond, strategist at Commonwealth Bank of Australia, said: "'Silver Week' could further increase uncertainty around the yen's trajectory, mainly because market liquidity may decline further during the holiday period. Over time, the USD/JPY exchange rate could again test the highs that previously triggered intervention. If this happens rapidly, especially around the BOJ meeting, the risk of further intervention could rise significantly." (Jin Shi)