Yen Extends Losses as Dollar Strengthens

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.

The Japanese yen slid to around 157 per dollar on Monday, reversing gains from the previous week as the dollar strengthened on safe-haven demand after President Donald Trump rejected Iran’s response to his peace proposal, dimming hopes for an imminent end to the 10-week conflict. Reports also indicated that Iran had proposed transferring part of its highly enriched uranium stockpile to a third country, while refusing to dismantle its nuclear facilities. Oil prices jumped, heightening inflation concerns and weighing on oil-importing economies such as Japan. Meanwhile, traders remain on alert after multiple rounds of suspected intervention by Japanese authorities starting April 30, which reportedly totaled about 10 trillion yen. While Tokyo has not confirmed intervention, top currency diplomat Atsishu Minura said officials are prepared to respond on all fronts to speculative moves, noting that the IMF places no strict limits on the frequency of intervention.