Intervention is key to the success or failure of the yen, fiscal discipline is the focus of the market.

The head of Mitsubishi UFJ foreign exchange research pointed out that the effectiveness of Japan's attempt to support the yen through foreign exchange intervention largely depends on the government's ability to properly manage fiscal policy risks. The current focus of the market is on the fiscal year 2026 budget that the Japanese government will pass this Friday, and investors are concerned that the budget may contain departmental spending beyond the norm. Analysts warn that if the budget does include extraordinary spending, it could lead to a drop in Japanese government bond prices and further exacerbate the depreciation pressure on the yen. In this scenario, the Japanese Ministry of Finance may be forced to intervene in the market to support the yen, but the success of such intervention actions is highly uncertain.