(Bloomberg) -- Yen traders are bracing themselves for a redux of September 2022, when Japan intervened in the market to prop up the ailing currency in the wake of a central bank decision that reaffirmed accommodative monetary policy.

With the yen already much weaker than it was then, and US interest rates unlikely to come down anytime soon, the mere lack of any hawkish comments from Bank of Japan Governor Kazuo Ueda on Friday may be enough to push the currency toward a possible inflection point. Based on an analysis of comments from Masato Kanda, the top currency official at finance ministry, 157.60 versus the dollar is one key level to watch.

Why the Yen Is So Weak and What That Means for Japan: QuickTake

There has been no sign yet of yen purchases by the ministry, even as the currency continues its slide and on Wednesday broke beyond 155 per dollar for the first time in more than three decades. But the situation could change very quickly, with a host of potential triggers for a sharp drop in the yen and action from authorities in Tokyo. 

Traders will be on high alert when the BOJ releases its policy statement and forecasts around midday Friday, then when Ueda holds a press conference in the afternoon, and once more when data on the Federal Reserve’s preferred inflation gauge is released. Beyond that are public holidays in Japan on Monday and Friday next week, which bring the risk of volatility amid thin trading.

“Looking back to 2022, the intervention did have an impact” and pressured those who held yen short positions for a while before dollar-yen resumed its upward trend, said Shoki Omori, chief desk strategist at Mizuho Securities Co. in Tokyo. “The carry is too good and investors will continue to have incentives to go long on the currency pair.”

Kanda said last month that a 4% move in the currency over two weeks doesn’t reflect fundamentals and is unusual. The threshold will be reached if the yen depreciates to about 157.60, based on Bloomberg-compiled data.

The yen extended declines to trade at 155.62 against the dollar as of 15:53 p.m. in Tokyo on Thursday.

Decision guide: BOJ to Stand Pat as Yen Lifts Odds of Hawkish Signals

“If the yen falls further, for instance dropping by 1-2 yen a day against the dollar, triggered by an event such as the BOJ’s decision, intervention is very likely,” said Tsutomu Soma, a bond and currency trader at Monex Inc. 

“However, if the yen moves in a narrow range like now due to the risk of intervention, it’s hard to justify,” Soma said. “There are many traders and investors waiting for a dip in the dollar-yen from intervention, which would also mean the impact will probably be quite limited.”

The risk that the BOJ will deliver a policy announcement that disappoints the market would reduce the effectiveness of intervening anytime before the meeting ends, according to strategists at Nomura Securities Co. including Yujiro Goto. Almost all BOJ watchers surveyed by Bloomberg forecast interest rate settings to be kept unchanged.

Finance Minister Shunichi Suzuki told parliament on Thursday he’s paying close attention to the foreign exchange market. He added that he hoped people would understand he can’t comment much on currency moves right now.

In a trilateral statement last week, the US, Japan and South Korea said they would continue to consult closely on foreign-exchange market developments while acknowledging serious concerns of Japan and Korea about the recent sharp depreciation in their currencies. 

The yen has slumped more than 9% so far this year, making it the worst-performing Group-of-10 currencies even after the BOJ in March raised the short-term policy rate for the first time since 2007.

“The government is probably keeping its powder dry to confront yen-selling pressures following a BOJ decision on Friday,” Makoto Noji, chief foreign-exchange and foreign bond strategist at SMBC Nikko Securities Inc. in Tokyo, wrote in a research note. It’s unlikely that the central bank turns out to be very hawkish, he wrote.

Read more: Intervention Risk Is Rising Going Into BOJ Meeting, BofA Says

(Updates with strategist comment in fifth paragraph, updates yen price in sixth.)

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