(Bloomberg) -- A fall in the yen through 155 against the dollar after the Bank of Japan’s meeting this week is looking possible and may trigger intervention, according to Bank of America Corp.

Japan’s currency was trading close to 154.89, the weakest level since June 1990 against the dollar, mid afternoon in Tokyo. That leaves it just shy of a “perceived line in the sand,” Shusuke Yamada, head of Japan currency and rates strategy at BofA Securities Japan Co., said in a note Tuesday. 

“For the BOJ to support the yen, it should acknowledge that policy has been accommodative, that the next hike is as imminent as June, and that the terminal rate would be higher than priced by the market,” Yamada said. “This is unlikely to be the case.” 

Since a sudden hawkish shift isn’t expected, “this week’s BOJ meeting could result in a dollar/yen rally above 155 yen,” according to Yamada.

Japan’s Ministry of Finance may have wanted to communicate its stance in currency policy with the US and the Group of Seven before taking action, Yamada said, noting a joint statement last week with the US, Japan and South Korea. 

Public sentiment toward a weak yen may also have worsened, with the latest increase in the USD/JPY rate accompanying a decline in Japanese equities, Yamada said. There’s also been a series of comments from business leaders over the past two weeks, making it politically costly to allow the currency to fall further, he said.

Yamada expects “smaller and more frequent interventions to push the dollar-yen rate down,” rather than a series of one-off large-scale interventions” as in 2022. There’s also the possibility of a single big intercession to first push the dollar down to nearly ¥150, followed by smaller moves to drive it down further. 

The market remains bullish on the dollar/yen rate, and “if the MOF does not intervene at around 155, the market may buy and bring USD/JPY to 160 quickly and test the MOF’s resolve at that level,” Yamada said.

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