Deutsche Bank: Japan's intervention may have to wait until the yen falls significantly below the 160 level.

Deutsche Bank said that Japan may have to wait for the USD/JPY exchange rate to "significantly exceed 160" before intervening to buy yen. Strategist Tim Baker wrote that the bank's USD/JPY model, based on real interest rate differentials, oil prices, and the S&P 500 index, shows a fair value of around 154, meaning the current exchange rate is only overvalued by 3%. He stated that the criteria for intervention that Japanese officials are considering does not seem so extreme given the speed of the current rise, which is still below previous standards, and there are almost no signs of large-scale speculative positioning. Expectations for capital inflows have also eased, with the latest monthly data showing that recent selling of foreign bonds is being conducted by banks rather than investors.