Yen moves in a positive zone under Japanese supervision

The Japanese yen rose in Asian trading on Wednesday against a basket of major and secondary currencies, remaining in positive territory for a third consecutive session against the US dollar. The move followed strong warnings from Japanese authorities signaling Tokyo’s readiness to intervene to support the local currency.

Meanwhile, according to the minutes of the Bank of Japan’s October meeting, policymakers discussed the need to continue raising interest rates toward levels considered neutral for the economy. Several of the nine board members noted that recent declines in the yen could lead to excessive inflation through higher import costs.

Price Overview

• Japanese yen exchange rate today: The dollar fell 0.4% against the yen to 155.55, from an opening level of 156.21, after recording an intraday high of 156.28.

• The yen ended Tuesday’s session up around 0.4% against the dollar, marking a second consecutive daily gain following strong Japanese warnings over excessive currency movements.

Japanese authorities

Japanese Finance Minister Satsuki Katayama confirmed that Japan has “full freedom of action” to take bold steps to deal with excessive volatility in the yen.

Speaking at a press conference on Tuesday, Katayama said that recent movements in the local currency do not reflect market fundamentals at all, but are driven by speculation, giving Tokyo justification to intervene in the market if necessary.

Katayama added that the government would take appropriate action to counter excessive movements, based on Japan’s agreement with the United States reached in September regarding exchange rate policy.

Earlier on Monday morning in Tokyo, Japan’s top currency diplomat Atsuki Mimura and Chief Cabinet Secretary Minoru Kihara both expressed concern over “sharp and volatile” moves in the foreign exchange market.

They stressed that Japanese authorities are closely monitoring currency developments and warned that officials are ready to take appropriate measures if needed, in a clear signal of potential intervention to curb excessive volatility.

Bank of Japan

According to the minutes of the Bank of Japan’s October meeting, released today in Tokyo, policymakers discussed the need to continue raising interest rates toward levels viewed as neutral for the economy, with some members arguing this would help achieve stable long-term growth.

Several of the nine board members warned that recent declines in the yen could fuel excessive inflation due to rising import costs.

At the October 29–30 meeting, the Bank of Japan kept interest rates unchanged at 0.5%, but Governor Kazuo Ueda sent a strong signal that a rate hike could be approaching. The two hawkish members, Hajime Takata and Naoki Tamura, opposed that decision and unsuccessfully proposed raising rates to 0.75%.

At the subsequent meeting held this month in December, the central bank raised interest rates to 0.75%, the highest level since September 1995, marking the second hike in 2025 after an earlier increase in January.

The October meeting minutes showed that many members already believe conditions are in place for further rate hikes, but they want greater clarity on whether companies will continue raising wages next year, especially amid ongoing uncertainty over the impact of higher US tariffs.

Japanese interest rates

• Market pricing for a quarter-point rate hike by the Bank of Japan at its January meeting remains stable around 20%.

• To prompt a repricing of these expectations, investors are awaiting further data on inflation, unemployment, and wages in Japan.