Yen Extends Rally on Verbal Interventions

The Japanese yen weakened toward 158 per dollar on Thursday, falling for the fourth straight session as the dollar gained traction on accelerating US inflation, which reinforced expectations that the Federal Reserve could maintain higher interest rates or even deliver an additional hike. The absence of decisive intervention from Japanese authorities also weighed on sentiment, although traders remain alert to potential action after US Treasury Secretary Scott Bessent expressed support for Tokyo’s recent efforts to stabilize the currency. On the policy front, the Summary of Opinions from the Bank of Japan’s April meeting suggested that policymakers debated the possibility of additional interest rate increases as early as the next meeting, with higher oil prices further complicating the inflation outlook. Separately, the OECD projected that the Bank of Japan’s policy rate could rise to 2% by the end of 2027.

The Japanese yen weakened toward 158 per dollar on Wednesday, falling for a third straight session as the dollar gained on hotter-than-expected US inflation data that reinforced expectations for tighter Federal Reserve policy. In Japan, the Summary of Opinions from the Bank of Japan’s April meeting indicated policymakers discussed the possibility of additional rate hikes as soon as the next meeting, with rising oil prices adding to inflation concerns. The OECD also projected that the BOJ’s policy rate could reach 2% by the end of 2027. Meanwhile, currency traders stayed alert to potential intervention after US Treasury Secretary Scott Bessent said both the US and Japan view excessive currency volatility as undesirable, remarks interpreted as supportive of Tokyo’s recent efforts to stabilize the yen.

The Japanese yen weakened to around 157.5 per dollar on Tuesday, extending losses for a second consecutive session as the dollar strengthened after President Donald Trump raised doubts over the durability of the US-Iran ceasefire following his rejection of Tehran’s latest peace proposal, keeping inflation risks in focus. Meanwhile, Japan and the US reiterated close coordination on currency policy after Japanese Finance Minister Satsuki Katayama met with US Treasury Secretary Scott Bessent. Tokyo is suspected to have spent more than $63 billion intervening in foreign exchange markets to support the yen, although authorities have not confirmed the operations. Elsewhere, the Summary of Opinions from the Bank of Japan’s April meeting indicated that policymakers are considering potential interest rate increases as early as the next meeting, as surging oil prices continue to heighten inflationary pressures.