Japan’s Finance Minister Satsuki Katayama has signaled the government’s readiness to carry out direct currency intervention to counter sharp fluctuations in the yen that, in her view, are not justified by economic fundamentals. Katayama emphasized that the legal basis for such action lies in a joint understanding agreed with the United States authorities, which—according to her interpretation—allows Japan to act without constraints.
Following the minister’s remarks, the yen strengthened slightly, reaching around JPY 158.16 per U.S. dollar. It is worth noting that Japan has not intervened in the foreign exchange market since 2024, when approximately USD 100 billion was spent to support the yen as the exchange rate approached the JPY 160 level.
In an international context, Katayama referred to recent talks with U.S. Treasury Secretary Scott Bessent. Both sides reportedly agreed that current exchange-rate volatility is excessive. At the same time, the U.S. Treasury noted in an official statement that the effectiveness of currency interventions depends not only on their scale or timing, but also on the consistency of monetary policy and the clarity of its communication. This position aligns with Bessent’s earlier suggestions that the Japanese government should grant the Bank of Japan greater flexibility in pursuing measures aimed at curbing inflation.
Although Katayama’s comments represent a clear escalation in verbal warnings from Japanese authorities, they do not yet amount to concrete action. Markets, however, remain particularly sensitive to any signals around the USD/JPY 160.00 level—the threshold at which intervention occurred previously. Rising tension and an explicit readiness to act may indicate that Japan’s government is prepared to resort to extraordinary measures should the yen’s depreciation intensify.
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