The Federal Reserve's Jackson Hole symposium this week looms as a key risk for Japanese authorities worried that new hawkish signals from U.S. central bankers could trigger another sharp yen selloff that would force Tokyo to prop up the currency.
While the yen's fortunes are largely a product of dollar movements, the currency's weakness has become politically problematic not only for Prime Minister Fumio Kishida but also the Bank of Japan, whose ultra-loose monetary settings have been blamed for inflating import costs.
BOJ Governor Kazuo Ueda is scheduled to attend the Jackson Hole meeting, which has thrown Japan curve balls in the past. But the more passive approach could change if hawkish comments by Powell drive up the dollar/yen at a faster speed, say three government officials with direct knowledge on Japan's currency policy.
"When to intervene has always been an extremely political decision in Japan. Nowadays, it's the prime minister that ultimately makes the call," said Atsushi Takeuchi, a former BOJ official who was involved in Tokyo's market foray a decade ago.
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