Yen Set for Monthly Advance

The Japanese yen strengthened past 157 per dollar on Wednesday and was on track to finish the month higher, as traders responded to a series of verbal warnings from officials signaling Tokyo’s determination to support the currency. Finance Minister Satsuki Katayama said Japan and the US would maintain close communication as they seek to preserve stability in currency markets amid rising concerns over the yen’s weakness. She also said President Donald Trump expressed concern about the yen during a meeting with Prime Minister Sanae Takaichi. Japan’s top currency official Atsushi Mimura also said this week that the prime minister and finance minister, along with the US, had delivered a “very clear” message regarding excessive currency depreciation. Still, the yen remained under pressure from wide US-Japan interest-rate differentials, as the Federal Reserve’s tightening outlook continued to outweigh the Bank of Japan’s rate hikes.

The Japanese yen steadied near 157 per dollar on Tuesday as renewed verbal intervention from Tokyo lent support to the currency. Finance Minister Satsuki Katayama said Japan and the US would remain in close communication as they work to maintain stability in currency markets amid growing concerns over the yen’s weakness. Her comments followed a Friday phone call with US Treasury Secretary Scott Bessent, during which the two officials reiterated concerns that the yen was undervalued and agreed to deepen cooperation. Japan’s top currency official Atsushi Mimura also said this week that the country’s prime minister and finance minister, together with the US, had sent a “very clear” message on excessive FX depreciation. The yen has remained under pressure despite the Bank of Japan’s rate hike this month, while subsequent BOJ guidance and rising expectations for further Federal Reserve tightening have fueled speculation that the US-Japan interest-rate differential could widen.

The Japanese yen weakened toward 158 per dollar on Monday, giving back some of the previous session’s gains as a stronger dollar and elevated Treasury yields continued to weigh on the currency, amid firm expectations that the Federal Reserve will further tighten policy to contain inflation. Rising oil prices also fueled inflation concerns while putting additional pressure on Japan’s oil-dependent economy. On Friday, the yen gained 1% after Finance Minister Satsuki Katayama said President Donald Trump had raised concerns about the yen during a meeting with Prime Minister Sanae Takaichi. Katayama reiterated that she would continue coordinating with her US counterpart Scott Bessent after Japan and the US conducted their first coordinated yen-buying intervention since 1998 in late July. Meanwhile, a former Bank of Japan official said the central bank could raise its benchmark interest rate for a second consecutive month in October, citing heightened inflationary risks.