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The US dollar maintained its strength above 161 yen in Tokyo trading on Friday, with the market largely ignoring a warning from Japan's Finance Minister about potential intervention against speculative yen weakness.
Japan's Finance Minister Satsuki Katayama has issued a stern warning against currency speculation as the yen plunges to near a 39-year low of 161 per dollar. The government threatens 'decisive' action to stabilize markets.
The Bank of Japan raised its key interest rate to 1.0% on June 8, the highest in 31 years, to combat inflation risks from rising oil prices and a weak yen. The move marks a decisive shift from decades of ultra-loose monetary policy.
Japan's Finance Minister reiterated the government's unwavering readiness to take 'decisive' measures against yen volatility. The statement came as the yen continues to weaken, raising import costs and pressuring the economy. Analysts see the comments as a clear signal to markets.
Japan’s Finance Ministry confirmed a record ¥11.73 trillion ($74 billion) in forex intervention during April and May to support the yen. The move came amid heightened Middle East tensions driving up import costs and yen weakness. It was the largest intervention since 2022, signaling Tokyo’s resolve to stabilize the currency.
Japanese authorities are expected to continue intervening in currency markets to slow the yen's decline, following fresh support from the US Treasury Secretary. The yen has fallen to multi-decade lows against the dollar, pressuring Japan's economy. Analysts note a shift in US policy, as Washington no longer strongly objects to Japan's interventions.
U.S. Treasury Secretary Scott Bessent said on May 2 that excessive foreign exchange market volatility is 'undesirable' and he would maintain close contact with Japan's Ministry of Finance. The statement comes amid significant global financial market fluctuations, especially involving the yen-dollar exchange rate.
Japanese Finance Minister Satsuki Katayama said she reached an agreement with US Treasury Secretary Scott Bessent to closely coordinate currency market actions after Japan intervened to slow the yen's slide. The talks focused on market stability and avoiding excessive volatility, with analysts viewing the pact as a key signal that may ease short-term pressure on the yen.
Japan and the US have pledged tighter ties on forex issues after high-level talks, aiming to stabilize markets as the yen weakens against the dollar.
