FX.co ★ Yen Strengthens as Japan Steps Into FX Market

The Japanese yen traded around 157 per US dollar on Friday, easing back after having surged as much as 3% to 155.5 overnight. The sharp move followed reported intervention by Tokyo in the currency market, which came just hours after officials issued what they described as a “final” warning to traders against selling the yen.

While the Finance Ministry has not formally confirmed that it stepped in, the sudden and sizable appreciation has led most traders to attribute the move to government support. Market participants are now evaluating the chances of additional intervention, as authorities typically undertake more than one round of yen purchases.

Earlier in the week, the yen had weakened beyond the closely watched 160-per-dollar level, a psychologically important threshold that previously prompted official action in July 2024. The latest currency swings are unfolding against the backdrop of recent policy decisions by both the Bank of Japan and the Federal Reserve, which have left interest rates unchanged. This has preserved the wide interest-rate gap between the US and Japan, supporting dollar strength and continuing to weigh on the yen.