Royal Bank of Canada analyst Abbas Kashwani said persistent yen weakness may
prompt the Bank of Japan to either raise rates or intervene in FX markets in the
coming weeks. Yen depreciation over the past month has largely offset the effect
of prior BOJ intervention. Kashwani said a sustained yen recovery would likely
require an aggressive tightening cycle, which the BOJ is unlikely to pursue at
the expense of growth, but the bank could still lift rates enough to prevent
excessive yen weakness until the JGB market stabilizes next year, creating scope
for a rebound.
