Japanese Yen Rises on Intervention Fears

The Japanese yen weakened beyond the 160-per-dollar mark, crossing a level widely seen by markets as a potential trigger for another round of currency intervention by Japanese authorities. The currency remained under pressure as a stronger US dollar gained support from a better-than-expected US jobs report, which reinforced expectations that the Federal Reserve could raise interest rates later this year. However, safe-haven demand for the greenback eased after Iran and Israel agreed to halt strikes against each other. Meanwhile, data released on Friday showed Japan’s foreign reserves recorded a record monthly decline in May as the government sold foreign assets to finance its largest-ever currency intervention a month earlier. On the monetary policy front, the Bank of Japan is widely expected to raise interest rates later this month as policymakers contend with persistent inflationary pressures driven by higher energy costs.

The Japanese yen traded near 160 per dollar on Friday, hovering around the closely watched level for a third straight session and prompting renewed verbal intervention from Japanese authorities. PM Takaichi said the government aims to strengthen confidence in the yen by improving economic fundamentals, emphasizing policies that encourage domestic investment, reinforce supply chains, and enhance growth potential. Meanwhile, Finance Minister Satsuki Katayama reiterated that authorities stand ready to step into the foreign exchange market if necessary and remain in close contact with US officials. Data released on Friday showed Japan’s foreign reserves fell at a record pace in May as Tokyo sold foreign assets to fund its largest-ever currency intervention a month ago. On the policy front, BOJ Governor Ueda said the central bank should carefully assess the costs and benefits of raising interest rates if inflation risks begin to outweigh downside risks to economic growth.

Japanese Prime Minister Sanae Takaichi on Friday said the government seeks to bolster confidence in the yen by strengthening the economy. Addressing parliament, she emphasized policies aimed at boosting domestic investment, fortifying supply chains, and raising Japan’s growth potential, noting that greater international competitiveness would help sustain trust in the currency. Meanwhile, finance minister Satsuki Katayama reiterated that authorities remain ready to act in the forex market if needed and are in close contact with U.S. officials. Japan spent over USD 73 billion between April 28 and May 27 to support the yen, its first intervention since 2024, according to Dow Jones Newswires, underscoring concern that further weakness could lift import costs for food and energy, intensifying pressure on households and businesses.