Goldman Sachs: Yen Depreciation Pressure May Re-emerge Over Time

"Japan is about to celebrate the Obon Festival, which may limit market participation, and the domestic event schedule is also relatively light," Nomura Securities strategist Yujiro Goto wrote in a research report. "The focus will remain on the intervention stance of Japanese and US authorities, and investors will be closely watching officials' statements." This reversal highlights the limitations of intervention measures in changing overall trends when the fundamental factors driving yen depreciation remain largely unchanged. Although both Tokyo and Washington have warned that they are prepared to take action again if necessary, the significant interest rate differential with the US, concerns about Japan's fiscal outlook, and geopolitical uncertainty continue to put pressure on the yen. "We believe the market's relatively subdued response to this intervention reflects the underlying reasons for currency weakness," Goldman Sachs strategists including Kamakshya Trivedi predicted in a report. "Unless there is a change in the global situation or an unexpected policy, depreciation pressures will reappear over time."