Japan Signals Readiness to Act Against Yen Volatility

The Japanese yen held firm around 159.3 per dollar on Friday after Finance Minister Satsuki Katayama warned that authorities could intervene in the foreign exchange market in the event of excessive volatility or speculative trading activity. Investors also awaited official Finance Ministry data due later in the day that may confirm government intervention in late April to support the currency, with some analysts estimating authorities spent as much as 10 trillion yen on stabilization efforts. Meanwhile, domestic data showed Japan’s retail sales expanded at the fastest pace in a year, while industrial production unexpectedly increased. Bank of Japan Governor Kazuo Ueda also warned this week about rising inflation risks tied to higher oil prices, though he stopped short of indicating whether the central bank may raise interest rates at its next policy meeting.

Japan’s Finance Minister Satsuki Katayama said Friday that authorities are prepared to act against excessive volatility in the foreign exchange market, reaffirming the government’s readiness to intervene if needed as the yen weakened toward the closely watched 160-per-dollar level. “As I have said for quite some time, when there is volatility or speculative movement, we can take decisive action,” Katayama told a regular press conference. Markets are also awaiting fresh intervention data from Japan’s finance ministry, due later Friday, which will cover currency operations conducted since late April.

The Japanese yen weakened to around 159.5 per dollar on Thursday, marking its lowest level in four weeks and moving closer to the key 160 threshold that reportedly prompted market intervention by Tokyo last month. Investors are now awaiting official finance ministry data due Friday that could confirm government action to stabilize the currency, with some analysts estimating authorities may have spent as much as 10 trillion yen in support operations. On the policy front, Bank of Japan Governor Kazuo Ueda warned of rising inflation risks linked to higher oil prices but stopped short of signaling whether the central bank could raise interest rates at its next meeting. Meanwhile, BOJ Deputy Governor Ryozo Himino reaffirmed the central bank’s commitment to further rate hikes, while noting that the timing and pace would depend on how the Middle East conflict affects Japan’s economy and inflation outlook.