[Bank of Japan Account Data Hints at No Large-Scale Yen Intervention on Wednesday] Data from the Bank of Japan suggests that the Japanese government did not appear to have conducted a large-scale intervention in the foreign exchange market on Wednesday, indicating that the sharp exchange rate fluctuations were likely due to trader jitters caused by a readjustment of interest rate hike expectations. The difference between the Bank of Japan's current account forecast released on Thursday and estimates from currency brokers was too small to indicate that Japan had intervened with yen purchases on the scale of a month ago. The Bank of Japan expects its current account to decrease by 410 billion yen due to fiscal factors, while the average estimate from the Central Accounting Research Institute, Ueda-Yagi Accounting Research Institute, and Tokyo Accounting Research Institute is for a decrease of approximately 700 billion yen. This difference is far less than 729 billion yen, the smallest intervention measure Japan has taken since 2022. The exchange rate volatility stemmed in part from traders adjusting their positions based on expectations of the Bank of Japan's interest rate hike direction. A series of comments from Japanese and US policymakers sparked speculation in the market about a possible acceleration of the tightening pace or even a significant interest rate hike, but sources familiar with the matter indicated that the Bank of Japan favors a 0.25 percentage point rate hike at its September meeting, dampening previous expectations of a larger rate increase.
