Yen Weakness Triggers Fresh Verbal Warning

The Japanese yen weakened beyond 159.5 per dollar on Tuesday, moving closer to the key 160 level that previously prompted official intervention to support the currency, drawing renewed verbal warnings from Tokyo. Finance Minister Satsuki Katayama said authorities stand ready to take appropriate action in currency markets when necessary, while noting increased volatility in oil and other financial markets. She also stated that ministry officials remain in close communication with their counterparts in Washington regarding foreign exchange developments. Data released on Friday showed that Japanese authorities spent ¥11.7 trillion on currency intervention in late April, confirming widespread market speculations. Meanwhile, investors are pricing in roughly a 78% probability that the Bank of Japan will raise interest rates again later this month as inflationary pressures linked to the Middle East conflict continue to intensify.

The Japanese yen traded around 159.5 per dollar on Monday, remaining under pressure and hovering near the closely watched 160 level that previously triggered official intervention to support the currency. Data released on Friday showed that Japanese authorities spent ¥11.7 trillion intervening in foreign exchange markets in late April, confirming widespread market speculations. On the policy front, investors remain divided over whether the Bank of Japan will deliver another interest rate hike this month, as policymakers weigh growing uncertainties linked to tensions in the Middle East. Market participants are now awaiting remarks from BOJ Governor Kazuo Ueda later this week for further insight into the central bank’s policy outlook. Meanwhile, Japan’s capital spending was unchanged in the first quarter compared with a year earlier, pointing to a slowdown in corporate investment and raising concerns about the strength of domestic economic momentum.

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.