Japan Fires Off Verbal Warning on Yen as Weakness Stokes Intervention Alert — Update

By Megumi Fujikawa

TOKYO--Traders were back on yen intervention watch after Japan's currency weakened to its lowest level against the dollar in two months and the country's finance minister issued a fresh warning against speculative foreign-exchange moves.

Japanese officials have battled to prop up the yen this year, including spending a record $50 billion in one day over the summer, as inflationary pressures worldwide redrew expectations for interest rates in the U.S. and elsewhere.

The latest trigger for yen weakness: hotter-than-expected U.S. consumer-price data earlier this week that fueled market expectations of rate hikes by the Federal Reserve. Analysts say markets are now pricing in around 29 basis points of tightening at the Fed's December meeting, which implies some think the central bank could raise rates by an outsize 50 basis points.

The bets on Fed rate hikes reinforce views that the Bank of Japan could be moving too gradually to narrow the rate differential meaningfully. This was illustrated by the dollar touching 160.10 yen on Friday, inching further past the 160 level breached Thursday that is widely seen as an intervention warning zone.

Speaking at a regular news conference on Friday, Finance Minister Satsuki Katayama called recent yen movements "one-sided and rapid," comments that will put markets on alert for potential action to shore up the yen.

"We will continue to coordinate closely with the U.S. Treasury Department and respond appropriately," she said.

Tokyo intervened in the currency market over the summer to contain sharp yen declines, spending a total of roughly 15.4 trillion yen in July and August. Despite the scale of the operations, which included rare joint action with Washington, the yen's downtrend hasn't reversed.

The BOJ's monetary tightening has also had little effect on the currency, even though a narrowing rate gap with the U.S. should be favorable for the yen.

Samara Hammoud, a currency strategist at Commonwealth Bank of Australia, said the Bank of Japan is struggling to match the Fed's increasingly hawkish stance even as it continues to tighten its own policy settings.

Still, she said Japanese officials typically focus on the speed and disorderliness of currency moves rather than defending a specific exchange‑rate level.

"We see intervention risk rising materially on a rapid or sustained break above 160," Hammoud said.

The yen's slide remains one of the major risks for Japan's inflation outlook, as a weak currency drives up prices of imports such as fuel and food. According to Bank of Japan data released Thursday, import prices rose 24.8% on a yen basis in October from a year earlier, following September's 23.8% increase.

The dollar's return to the 160-yen mark for the first time in about two months is heightening caution over jawboning by Japanese officials, Daiwa Securities said.

Its strategists added that stepped-up verbal warnings could limit the U.S. currency's rise.

"It is still too early to forget the memories of this summer," Japan's top currency diplomat, Atsushi Mimura, said Thursday.

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

(END) Dow Jones Newswires

November 13, 2026 01:30 ET (06:30 GMT)