When you look at the map of Japan’s neighbors, my answer is no.
All their regional trading partners manage their currencies to one extent or another from China to South Korea to Singapore to Taiwan. Japan is at a major disadvantage if it allows the JPY to strengthen unchecked.
On the other hand, they are likely chastened by the experience of the Swiss in recent months who lost billions trying to weaken their currency.
Look for the BOJ and MOF to try and ratchet up verbal intervention and employ proxies (like Kampo) to weaken the JPY in the near-term. If the market happens to get very short of USD/JPY, perhaps they would then enter the market to hurt the speculators. Otherwise, expect a conservative approach.
Most see 85-ish as Japan’s line in the sand. If risk aversion stays high next week, look for the market to test Japan’s pain threshold.
