Japanese authorities intervened decisively in the foreign exchange market after the yen breached the psychologically important 160 per dollar threshold — a level that previously triggered official action in July 2024.
Finance Minister Satsuki Katayama had earlier delivered a "final warning" to yen speculators, saying the timing for "decisive action" was approaching. Hours later, the Ministry of Finance confirmed it had conducted yen-buying operations, sending USD/JPY surging more than 400 pips from its highs of 161.80 back toward the 156.50–157.00 range.
BOJ Holds, But Hawkish Signals Grow
The Bank of Japan held its short-term policy rate steady at 0.75% — the highest level since September 1995 — at its April policy meeting. However, Governor Kazuo Ueda reiterated the central bank's commitment to gradual tightening, while three of the nine board members voted in favour of an immediate hike, signalling growing internal pressure.
The BOJ simultaneously slashed its 2026 economic growth forecast by half to 0.5% and raised its inflation outlook to 2.8% from 1.9%, citing elevated energy costs stemming from the ongoing Strait of Hormuz standoff.
Market Reaction
The yen traded around 157 per dollar on Friday, stabilising after its sharp overnight reversal. Market participants are now assessing the likelihood of a second round of yen-buying operations, as Japan historically conducts multiple interventions once the threshold is crossed.
Currency strategists at major institutions warned that without a corresponding BOJ rate hike, the intervention effect is likely to be temporary. "Intervention buys time, but fundamentals — especially the US–Japan rate differential — will reassert themselves," one analyst noted.