Yesterday, the Japanese Finance Minister clearly stated that they would intervene against "abnormal fluctuations" in the exchange rate; today, the minutes of the Bank of Japan's October monetary policy meeting reiterated the stance on interest rate hikes and the expectation of continued rate increases in the future.

Under the combined effects of verbal intervention, expectations of interest rate hikes, and a weakening dollar, the dollar has retreated to around 155.8 against the yen, but this is still not enough. Above 155 is a sensitive range for the Japanese government, and only a drop below 155 will significantly cool verbal interventions.

For the Japanese government and the central bank, the most comfortable exchange rate range is 140–155:

No strong intervention is needed; once breached, action must be taken through statements or policies.

Personal judgment:

Against the backdrop of yen interest rate hikes + government verbal intervention + the temporary weakening of the dollar, Japan is more likely to target below 150 this time, maintaining the range of 140–150.

There are two core objectives:

First, to prevent the yen from depreciating too quickly, leading to uncontrollable imported inflation;

Second, to better coordinate fiscal policy and conduct structural adjustments to the economy.

If the yen continues to strengthen, the impacts will gradually become evident:

On the trade front - favorable for imports, unfavorable for exports, which may drive some key industries reliant on overseas exports to relocate to the U.S.;

On the financial front - attracting international capital back to Japan, reducing allocation to dollar assets and other overseas assets;

On U.S. stocks - the style leans towards defensiveness, with high-quality assets benefiting relatively. If the yen appreciates too quickly, the arbitrage space will be compressed, and Japanese bond yields will rise rapidly, which will clearly be unfavorable for high beta, valuation-sensitive assets, especially tech stocks and emerging industries.