MUFG sees rising risk of Japanese FX intervention

The risk of intervention in foreign exchange markets by authorities in Japan was contributing to recent weakness in the US dollar, MUFG analysts said.

In a research note sent to clients, currency analyst Lee Hardman highlighted a meeting that was set to take place between officials from the Ministry of Finance, Bank of Japan and the Financial Services Agency.

According to Hardman, the meeting heightened the risk that policymakers in Japan might take action to prop up the yen.

"USD/JPY has been moving closer to the highs from in 1998 when Japan last intervened to support the yen," he said.

"The heightened risk of intervention should help to ease the pace of the yen sell-off in the near-term."

Hardman also noted comments from Japanese officials since US dollar/yen exchange rate jumped past the 140.0 level, although not details were available of what the content of Thursday's meeting might be.