Japan's policymakers can't do much to yank the yen off the Everest-style peaks it's scaled since the U.K. voted to exit the European Union (EU), Goldman Sachs' chief Japan strategist cautioned.
Kathy Matsui's comments came as Japanese Prime Minister Shinzo Abe said the government was continuing to watch movements in the equities and forex markets, adding that the Brexit's impact on Japan's economy may not be visible until the medium to long-term.
Also on Tuesday, Bank of Japan Governor Haruhiko Kuroda said the central bank was ready to take steps to ensure financial markets continued to function normally, Reuters reported, while Finance Minister Taro Aso reiterated that he was closely watching the foreign-exchange market and would respond if necessary.
Matsui said, however, that government intervention to weaken the yen was unlikely.
She noted that at the Group of Seven (G7) meeting held in Sendai, Japan, in May, global policymakers agreed that stimulating economic growth shouldn't depend solely on monetary stimulus.
"The idea or thought that Japan and other major economies could do some kind of coordinated intervention on the currency side would seem to go against the grain or the philosophy of what they've just decided," she said, calling potential Japanese intervention a "pretty low probability option."
The yen has surged in the wake of the Brexit referendum results on Friday, with the dollar fetching just 101.62 yen at 9:15 a.m. SIN/HK. That was down from the dollar/yen currency pair's 106.81 yen level early in Friday's session, when the remain camp appeared to be headed for a win.
Tuesday's dollar level, did, however, mark a recovery from Friday's session low of 99.08 yen, its lowest since 2013. But it was still well below levels above 121 yen touched just before the Bank of Japan (BOJ) surprised markets on January 29 by introducing a negative interest rate policy.
Matsui noted that any attempt at intervention might not do much for the currency.