Minister of Finance Suzuki said "I want to watch the market trend with a sense of tension." "As the USDJPY touch 130 yen, Will we enter a phase where such upside movement is repeated in the future? I want to keep in mind that it probably isn't."
But given the dollar/yen’s trend is based on fundamentals and divergence in monetary policy, the market will again test the pair’s upside. Key near-term is whether Japan will change the tone in its verbal intervention. Once 130 is broken, the next target for the currency pair is 140.
The softer yen is amplifying the pain of soaring commodity prices on a fragile economy that is expected to have contracted slightly in the first three months of the year. For now the BOJ is sticking to its stimulus stance arguing that underlying inflation is still too weak to warrant change, despite continued speculation it will have to tweak policy.