The Japanese yen extended its decline on Friday, prompting the strongest warning yet from policymakers, who hinted at potential foreign-exchange intervention and an earlier rate hike to counter rising living costs.
The dollar climbed to ¥159.84, its highest level in nine months, with the yen now down roughly 6% since Prime Minister Ryuichi Sazanae took office.
Finance Minister Satoshi Katayama said Tokyo was “closely monitoring excessive currency movements” and stood ready to act if necessary—remarks widely seen as a precursor to direct market intervention.
Bank of Japan Governor Kazuo Ueda added that the central bank would “carefully discuss the timing of a rate hike” in upcoming meetings, suggesting borrowing costs could rise as soon as next month. Such a move would follow Japan’s first rate increase in decades earlier this year.
Analysts view the ¥160-per-dollar level as the likely trigger for intervention. Japan last entered the FX market in July 2024, spending billions to support the yen.
Attention now turns to the December 19 BoJ policy meeting, where officials may act sooner than expected if yen-driven inflation pressures continue to build, threatening household purchasing power and consumer sentiment.