JPMorgan strategist Junya Tanase suggested that Japanese authorities chose to intervene in the currency market before the Bank of Japan's policy decision on July 31, anticipating that Governor Kazuo Ueda's dovish comments could trigger renewed yen selling.

At this stage, it is difficult to send a clear signal on the pace of interest rate hikes, and the market has largely priced in an October rate increase. "There is a risk that this policy communication could be interpreted as dovish by the market," Tanase noted. If authorities do intervene, the scale is likely to be significant, with cumulative intervention possibly exceeding the 2024 threshold of 15 trillion yen ($94 billion). "If foreign exchange reserves decline further, it may be difficult to restore them to previous levels through reserve management tools, implying limited room for additional intervention going forward," he added.

Recent official statements have mentioned using the Government Pension Investment Fund to curb yen weakness and suppress Japanese government bond yields. This indicates that as room for currency market intervention continues to narrow, policymakers have begun considering alternative policy tools.