The impact of the intervention was limited, and the yen slipped to a low point

The yen is weaker than the level that previously triggered the latest round of suspected intervention by Japan, highlighting the limited impact of intervention in the foreign exchange market.

The yen once hit a four-week low of 157.71 against the US dollar, then recovered some of its losses. The level of exchange rate fluctuation is currently close to the much-watched 157.52 mark. The yen strengthened sharply after hitting this level on May 1.

Continued weakness reflects the large yield gap between Japan and other major economies, which has prompted capital to withdraw from the yen and to potentially higher-return assets. Although the yield on Japanese treasury bonds hit a ten-year high, the pressure on the yen has not abated.

Masaaki Omori, chief trading strategist at Mizuho Securities, said that Japanese yen arbitrage is still too attractive, and fast money investors continue to short the yen. Unless speculations surrounding the Fed will cut interest rates drastically or the Bank of Japan will raise interest rates drastically, the strong momentum of the dollar against the yen is unlikely to change.

The yield on Japan's 10-year treasury bonds once rose 2.5 basis points to 1.1%, the highest level since July 2011.

After the Bank of Japan withdrew from the negative interest rate policy in March, market speculation that interest rates will be further raised this year has heated up, and the benchmark yield has been rising.

“Even if the yield on Japanese treasury bonds rises slightly, it doesn't matter,” said Masateru Omori. The market is still focused on higher-yielding currencies.

Not only is the yen depreciating against the US dollar, but it is also weakening against European currencies. The yen is close to its lowest level against the British pound since 2008, and is approaching a record low against the euro. The yield on US and UK 10-year treasury bonds was more than 300 basis points higher than Japanese treasury bonds for the same period.

The Japanese authorities did not confirm whether the market entry interfered in buying yen at the end of April and the beginning of May, but based on commercial banks' deposits at the Bank of Japan and the expectations of brokers, it is estimated that Japan may have bought about 3.5 trillion yen (about RM104.8 billion) at the time.

Japan's Finance Minister Shunichi Suzuki has stated many times that he is closely monitoring the development of the foreign exchange market and will take appropriate measures if necessary circumstances arise. However, the yen exchange rate is not changing as fast as it was a month ago, and Japan needs to be wary of resistance from trading partners.