Japan’s top currency official warns the yen is falling too fast as it nears 160 per dollar

Japan’s top currency diplomat said the yen’s recent fall has been too rapid^2,3. The official also warned markets against forgetting the intervention Japan carried out over the summer¹.

After that joint operation, US Treasury Secretary Scott Bessent and Japanese Finance Minister Satsuki Katayama warned that the authorities stood ready to act again¹. In an earlier intervention, the Japanese government and the Bank of Japan bought a total of over 15 trillion yen against the dollar³.

The yen moved toward the key level of 160 per dollar after US inflation data, raising the risk of intervention^4,5. The dollar rose to a 19-month high as bets on Fed rate hikes grew⁷.

Why it matters to investors

The pressure on the yen comes from the gap between the two central banks. October US inflation data and hawkish remarks from Fed officials lifted bets on rate increases in December and early next year⁷. Fed rate bets lifted the dollar and left the yen near 160⁶.

The Bank of Japan has been cautious about raising interest rates, which limits the yen’s ability to strengthen². Governor Kazuo Ueda has kept the door open to further increases after the central bank held rates steady at its October meeting⁴.

An intervention would mean Tokyo selling dollars to buy yen, as it did when it bought over 15 trillion yen in the earlier operation³. The joint warning from Bessent and Katayama after the summer action signalled that Washington and Tokyo were aligned on readiness to act¹.

What to watch

Markets are watching comments from New York Fed President John Williams, who was scheduled to appear on a panel on Thursday^6,7. His views on the pace of US rate increases bear directly on the dollar’s strength against the yen⁷. The dollar’s climb to a 19-month high shows how far bets on Fed hikes have already moved currency markets⁷.

The 160 level is the line traders are treating as a trigger for intervention risk^4,5. Any further rapid moves would test how far Japanese officials go beyond verbal warnings, given their reminder about the summer operation^1,2. A shift in the Bank of Japan’s rate path would also change the picture⁴.