It's a landmark moment in financial markets but symbolism isn't enough to cut it if Japanese authorities really want to arrest the decline in the yen currency. History is filled with stories of intervention by central banks and one thing is for certain. When these sort of things are conducted in isolated fashion or rather with poor coordination i.e. repeated attempts with bad timing and/or meagre amounts, they tend to not work out too well - especially in the big picture.
That is not to say that the Japanese government and BOJ are amateurs in this matter but the situation at hand is rather tricky. I shared some of my thoughts earlier:
"I would be remiss not to question the effectiveness of such a move (yen intervention). There is no doubt that this is a big moment in financial markets but it comes at a rather bad time honestly for Japan. Let's take stock of the situation.
"For one, officials are only intervening after a 26% drop in the currency this year. Meanwhile, the BOJ remains at odds with the Fed in terms of monetary policy - in fact they couldn't be at more opposite ends of the spectrum. That fact alone is enough to also make the yen less alluring as a safe haven currency as compared to the dollar amid widening rate differentials.
"And unless this is Japan signalling that they are ready to put a stop to the policy divergence, which is odd because the timing comes right after the BOJ said that they would maintain its policy stance as it is appropriate amid current economic circumstances, then officials are still fighting an uphill battle in terms of intervention. And that isn't really ideal."
There has to be an end goal in mind in conducting such a move and if the fundamental play of policy divergence remains, it is hard to see how this is not going to be a painful exercise for Japan.
As much as this is a major signal to markets that they are indeed ready to take action, it could just prove to be short-lived as traders start to slowly push that boulder towards the 145.00 hill again. If that takes place at let's say in December, will Japan want to step in again then? Or is it just all about pacing out the decline in the yen? I guess time will tell.