Japan's Finance Minister Issues Fresh Verbal Warning as Yen Falters

By Megumi Fujikawa

TOKYO--Japan's Finance Minister issued another verbal warning on the yen, suggesting authorities are prepared to act to stem excessive currency depreciation.

A joint statement between the U.S. and Japan says that "decisive action--meaning intervention--can be taken against sharp currency moves that do not reflect fundamentals," Satsuki Katayama said at an event held by the Japan National Press Club on Friday.

"Since that provision contains no limitations, restrictions, or conditions, my understanding is that by reaching this agreement, both sides have endorsed that clause," she added.

The comments come as traders keep a wary eye on the yen, which has weakened to levels that may trigger government intervention. Katayama has repeatedly said recent moves in the currency do not align with economic fundamentals.

The yen reached 159.45 against the dollar this week, its weakest level since July 2024, when Japan last intervened in the foreign-exchange market. The currency was trading at around 158.20 on Friday afternoon in Tokyo.

The yen has been under pressure for months, weighed down by factors including political uncertainty as a new administration settles in, as well as its role in carry trades, in which investors borrow in a low-interest currency to invest in higher-yielding ones.

Prospects of a snap election in Japan have added to pressure on the currency this week, amid concerns that the outcome could pave the way for increased fiscal spending. Analysts say Prime Minister Sanae Takaichi's high approval ratings point to a victory for the ruling Liberal Democratic Party, which would give her a stronger mandate to pursue more aggressive economic and fiscal policies.

The prime minister is known for favoring expansive government spending and has made "responsible and proactive fiscal policy" a central theme of her administration. In November, she announced a major economic stimulus package aimed largely at easing households' rising living costs.

Prolonged yen weakness could complicate the government's efforts to contain living costs, as Japan relies heavily on imports for essentials such as energy and food. Such cost-driven inflation is also a concern for the Bank of Japan.

Both the government and the central bank are trying to craft policies that allow prices and wages to rise in tandem, as recent inflation has been driven more by higher import costs than by stronger domestic demand.

Write to Megumi Fujikawa at megumi.fujikawa@wsj.com

(END) Dow Jones Newswires

January 16, 2026 04:01 ET (09:01 GMT)