Japan's Former FX Chief: Yen Undervalued by 20%, Warns of Intervention Risk

According to Jin10, Yamawaki Tatsuo, a former Japanese Finance Ministry official and ex-FX policy chief, said on Monday that the yen should appreciate to around 130 per dollar from current levels, representing an upside of up to 20%. Yamawaki suggested that current estimates of a 10% undervaluation may be conservative. "If the yen moves to around 130, I wouldn't be surprised. That's my view," he said.

Yamawaki warned that market participants holding yen short positions should not mistake Japan's recent calm as complacency. "They've issued warnings. Anyone still holding yen shorts is aware of the risk of intervention punishment—forced liquidation. The Finance Ministry has moved beyond warnings. Authorities have made clear they're willing to take action," he stated.