Japan’s solo FX intervention won’t be that effective

“Solo currency intervention wont be that effective” in stemming sharp yen falls, which are driven by the interest-rate gap between the United States and Japan, she told Reuters.

Raising Japan‘s ultra-low interest rates would also be difficult given the impact that could have on the country’s 550 trillion yen ($3.84 trillion) of bank loans, Katayama, chairperson of the Liberal Democratic Partys (LDP) research commission on finance and banking systems, said on Wednesday.

A former Ministry of Finance (MOF) official, Katayama has deep expertise on financial markets.

Japanese authorities on Wednesday signalled the chance of intervening to prop up the yen by conducting a rate check with banks, though many analysts doubt Tokyo will actually step in due to the difficulty of convincing its G7 counterparts.

($1 = 143.3300 yen)