Japanese Yen: BoJ normalization expectations and contained moves – BNY

Wee Khoon Chong at BNY reports strong Japanese macro data and resilient housing and commerce indicators, supporting the narrative that Japan has exited deflation and Bank of Japan (BoJ) normalization remains in play. US Treasury Secretary Scott Bessent describes recent Japanese Yen (JPY) moves as well‑contained, reducing expectations of imminent joint intervention while markets watch the September BoJ meeting.

Macro resilience and policy normalization

“Japans industrial production was flat m/m in July (+0.1% m/m on a seasonally adjusted basis). Shipments rose 2.2% m/m, while inventories increased by 0.5% m/m and the inventory ratio fell 1.7% m/m.”

“Strong Japanese macro data keep BoJ normalization alive.”

“U.S. Treasury Secretary Scott Bessent has said recent yen moves are ”pretty well-contained“ and not disorderly, reducing immediate expectations of another joint U.S.-Japanese intervention. He noted that the yens slide below 160 per dollar has drawn market attention, but framed it as manageable.”

“Bessent said he expects BoJ Governor Kazuo Ueda to ”do the right thing“ on policy, while declining to tell Japan what to do on rates. He suggested Japan has already overcome deflation and that the era of Abenomics is ending, with the country shifting toward ”Takaichi-nomics.“”

“His remarks come ahead of the BoJs September 17-18 meeting, where markets are watching for a possible rate hike. Bessent also plans to meet Ueda at the G20 gathering in Asheville.”