Bank of Japan, BoJ, will not intervene as long as the USDJPY rate is below 145. More and more experts believe in this paradigm. But the yen is still stubbornly higher. What would be BoJ’s immediate steps?

Today, on October 10, the Japanese yen is still trading well above 145 per dollar, with its sequential hike having been started back on Monday, Oct. 3. The move has sparked new warnings from Japan's finance minister and fueling speculation that the government might intervene to support the currency for the second time this year. After that, the dollar / yen again went below 145.00.

The yen has nosedived 21% vs. the dollar year-to-date. In September, the Japanese currency fell to a 24-year low of 145.90 before Japanese financial authorities stepped in on September 22 to contain the yen's losses.

“If we see excessive unilateral action or anything like that, we will take decisive action as needed,” Finance Minister Shunichi Suzuki said, speaking after the rate went beyond 145. “That mindset hasn’t changed.”

The yen has depreciated sharply this year due to a divergence in monetary policy and a growing rate differential between the dovish BoJ and the hawkish U.S. Fed. The Japanese Ministry of Finance spent 2.84 trillion yen (approximately $19.6 billion) in September alone to slow the depreciation of the yen.

Japanese financial authorities may intervene again, but history shows the impact may be as short-lived as ever before. The yen is at risk of further depreciation as long as the BoJ's yield curve control is maintained and other central banks, including the Fed, continue to tighten or normalize policy."

Japan had $1.29 trillion in foreign currency reserves as of August 31, of which $135.5 billion was attributed to deposits with foreign central banks and the Bank for International Settlements. If history is of any indication, when BoJ intervened to support the yen in 1998, the country did not act unilaterally, as the U.S. was also involved in selling dollars.