The yen exchange rate briefly strengthened after the suspected intervention by the Bank of Japan, but is currently weakening again. The yen is trading at 156.47 against the US dollar, and is below the 5 level against the Hong Kong dollar at 4.992. DWS currency strategist Xueming Song said that unless the Bank of Japan changes its monetary policy to lean towards hiking interest rates, the yen is expected to continue to face pressure in the medium term. It is widely believed that the yen will weaken further after intervention by the Bank of Japan and weak short-term data from the US, with market forecasts suggesting the yen could fall to 170 against the US dollar. This means that if the exchange rate is 7.81 against the US dollar, the yen could fall to 4.59 against the Hong Kong dollar. DWS stated that the yen's rebound was mainly due to intervention by the Bank of Japan, and weak US economic data over the past two weeks also contributed to the yen's rebound. Due to the extreme bearishness in the market towards the yen, the yen may continue to appreciate against the US dollar. However, unless the Bank of Japan changes its monetary policy to lean towards raising interest rates, the yen is expected to continue to face pressure in the medium term. It is worth noting that Japanese institutions are also primarily shorting the yen, as evidenced by the investment portfolios of Japanese insurance companies and pension funds. In fact, DWS believes that Japan's inflation rate is in line with the Bank of Japan's projections and is expected to reach its target of around 2%. However, there has been no positive response from the financial markets after the yen's hike, which may be due to two reasons. One is that the Bank of Japan still maintains a dovish stance. The second reason is that the Bank of Japan has not announced any policy outlook or interest rate path. From an economic perspective, even if Japan raises wages in 2023, domestic consumption remains very weak, so the Bank of Japan has been hesitant to raise interest rates. With consumption failing to recover sustainably, it is unlikely that the 2% inflation target will be achieved in the medium term. Furthermore, if the yen falls to 170 against the US dollar, DWS points out that the impact on Japan would be significant, as import inflation would drive domestic inflation, but high prices could have a negative impact on consumption, potentially offsetting all the positive effects of past wage growth agreements. The 2% inflation target may once again become unattainable.