USD/JPY exhange rate will increase? Doubtful

Bank of Japan (BOJ) announced today that after a few years of break, they will intervene in the currency markets and sell a part of their yen holdings. This means that the value of the dollar should increase in terms of yen (USD/JPY exchange rate rallied 3% today). Mitsubishi UFJ Asset Management, however, thinks that this will not cause a significant decline for yen.

Well, if you take a look at the graph below you will find out why. In 2003, BOJ sold 20.4 trillion yen and in early 2004 they sold another 14.8 trillion yen (look at the graph, and you will see exactly when it happened). Now, look what happened to the USD/JPY exchange rate when BOJ intervened - it stabilized, but didn't fall. In fact, Mitsubishi UFJ USD/JPY target for FY2010 is $78.