Yen Extends Rally on Suspected Intervention

The Japanese yen climbed to around 155.5 per dollar on Friday before easing back, a day after Tokyo was suspected to have intervened in the currency market as officials delivered a “final” warning to traders against selling the yen. Although the Finance Ministry has not formally confirmed intervention, the sharp and sudden move led traders to widely attribute the action to government support. Market participants are now assessing the likelihood of additional steps as the government typically conducts more than one round of yen purchases. Earlier in the week, the yen had weakened beyond the psychologically important 160 per dollar threshold, a level that previously triggered official action in July 2024. The currency moves come in the context of recent policy decisions by both the Bank of Japan and the Federal Reserve, which held interest rates steady, maintaining a wide US–Japan rate differential that continues to favor dollar strength and pressure the yen.

The Japanese yen traded around 157 per US dollar on Friday after surging as much as 3% to 155.5 overnight, as Tokyo intervened in the currency market hours after officials delivered a “final” warning to traders against selling the yen. Although the Finance Ministry has not formally confirmed intervention, the sharp and sudden move led traders to widely attribute the action to government support. Market participants are now assessing the likelihood of additional steps as the government typically conducts more than one round of yen purchases. Earlier in the week, the yen had weakened beyond the psychologically important 160 per dollar threshold, a level that previously triggered official action in July 2024. The currency moves come in the context of recent policy decisions by both the Bank of Japan and the Federal Reserve, which held interest rates steady, maintaining a wide US–Japan rate differential that continues to favor dollar strength and pressure the yen.

The Japanese yen strengthened by more than 2% to below 157 per dollar, in what traders saw as intervention by the Bank of Japan. Earlier in the session, Japanese officials delivered a “final” warning against selling the currency, with Finance Minister Satsuki Katayama saying the timing for “decisive action” in the market was approaching. The currency had weakened past the 160-per-dollar mark on Wednesday, its lowest level since July 2024, when authorities last intervened to support it. Last week, the Bank of Japan kept its policy rate unchanged at 0.75% as it continues to balance inflation risks against slowing growth concerns linked to the Middle East conflict. Three of the nine board members voted in favor of a rate hike, and Governor Kazuo Ueda reiterated the central bank’s commitment to gradual tightening.