Japan’s government warned on Friday it would act against disorderly moves in the currency market after the yen slid past 160 to the dollar for the first time in more than two months, putting traders on alert for possible intervention.
Finance Minister Satsuki Katayama told a regular news conference in Tokyo that recent movements in the foreign exchange market had been “one-sided and rapid”, and said Japan would continue to work closely with the US Treasury and “respond appropriately”.
The yen fell as low as 160.03 per dollar, crossing the psychologically important 160 level for the first time since early September. The slide followed a hawkish reassessment of the Federal Reserve’s interest-rate path, which has pushed US yields higher and widened the gap with Japanese rates, making the dollar more attractive to hold.
Katayama’s warning came a day after Japan’s top currency diplomat, Atsushi Mimura, said it was “too early to forget” this summer’s intervention — a reminder that Tokyo has shown it is willing to step into the market when it judges moves to be excessive.
Japan last intervened on three days between 30 July and 3 August, spending a record 15.4 trillion yen ($96.47 billion) as the currency slid towards its weakest levels in 40 years near 164 per dollar.
New detail published on Thursday underlined how far that operation went. The Federal Reserve Bank of New York said in its quarterly report on currency market operations that it bought 79.4 billion yen in the spot market on 31 July, selling euros from the Exchange Stabilization Fund. It was the first US yen-buying intervention since 1998, and the report showed Washington acted alongside Tokyo to support the Japanese currency.
The 160 level matters because it has become the market’s shorthand for the point at which Japanese officials grow uncomfortable. Traders watch it closely: a break through it has in the past been followed by verbal warnings, and, if the slide continues, by actual buying of yen.
For now, the warning is only words. But with the yen again at a level that prompted a record intervention only three months ago, and with US rate expectations moving against it, markets will be watching closely to see whether Tokyo’s patience runs out.
Sources: Reuters — “Japan’s finance minister vows action as yen breaches 160 threshold“
