Bloomberg Surveillance · Monday, August 3, 2026
Jeremy Stretch of CIBC discusses Japan's recent currency intervention, noting its increased weight due to coordinated US Treasury moves. He highlights underlying issues in Japan, including a terms of trade shock, deficit problems, and a significant interest rate differential with the US, suggesting the intervention is primarily a containment policy.
“Compared to the April May interventions, the latest round arguably carries more weight because of the coordinated moves by the US Treasury.”
“You're facing a term to trade shark that oil is attributed to. You've got deficit issues as well, a massive rate different and saws with the US. Why does this intervention help them fight those three?”
“Well, indeed, you are talking about, in effect a containment policy, because unless the oil price is going to come down materially, or unless the interest rates spread between the US and Japan closes exponentially, and that would imply that the boj would have to bring forward, not only bring forward that policy, tiling would be more aggressive, and perhaps the market reprice the FED expectations. It is seemingly more of a containment issue.”