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The Japanese yen surged more than 2.5 per cent against the dollar in a few hours on Thursday amid reports that Tokyo had intervened to support the currency and after authorities issued a rare “final” warning to speculators to close their bets against it.
The yen touched a low of more than ¥160 to the dollar on Thursday before finance minister Satsuki Katayama told reporters that it was “nearing the time for decisive action on the falling yen”, sending the currency close to ¥155.50 to the greenback.
Following the comments, Nikkei reported that Tokyo had intervened in currency markets, citing government sources.
Katayama said officials would monitor currency markets over the national “Golden Week” holiday from Friday to Wednesday. “I just want to say this to everyone — keep your smartphone close, whether you are going out or taking a rest,” she said, suggesting that intervention could happen on overseas markets while Japanese trading is closed.
Atsushi Mimura, Tokyo’s chief currency diplomat, said he was in constant touch with Washington — a strong indication that Tokyo had been given a green light from the US to step directly into the FX market if necessary.
Tokyo has been hinting strongly at such a move as the yen’s extreme weakness has extended over the past six weeks.
“Let me say this as my final advisory if you want to escape,” Mimura said, in a comment aimed at speculative investors believed to have bet heavily against the yen in recent days.
Tokyo’s latest moves came after the yen fell to ¥160.72 to the dollar on Thursday morning on concerns that Japan’s import-heavy economy would be hit hard by rising energy prices and other disruption related to the Iran war.
Traders described the morning slide, which took the yen to levels similar to those at which Tokyo intervened in mid-2024, as a test of the authorities’ resolve. Thursday’s fall took the yen below the level at which US authorities in January conducted a so-called rate check in FX markets, sparking speculation of a joint US-Japanese intervention.
Analysts said the large size and timing of the moves were consistent with intervention having happened.
“What is very clear and very public is that the Ministry of Finance was uncomfortable with what was happening with the yen,” said Dominic Bunning, head of G10 FX strategy at Nomura, adding that the risk to authorities of issuing such warnings without intervening was that “being the ‘boy who cried wolf’ could limit their credibility”.
In 2024, Japan deployed about $100bn in a series of interventions where it stepped into currency markets to support the yen.
